CHAPTER 13

ESG and Performance: What the Evidence Says

Returns, risk and the cost of capital

Opening question

“Do ESG portfolios beat the market — or do I pay for my principles?”

In this chapter

Two opposite theories: lower risk and lower expected return, or better management and higher return
How ESG can change a company's cost of capital, with a worked valuation example
What meta-studies and landmark papers found about returns
Why results depend on the period, the rating and the method
The evidence on risk: tail risk, controversies and engagement
Flows, re-pricing and the equity "greenium", with a worked example
Separating ESG from familiar factors such as quality and size
A balanced view of what to expect, including in Asia and Vietnam

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This chapter is in the full book

Chapter 1 is free to read online. The full text of chapter 13 — with its tables, figures, worked examples and practice lab — is available in the complete edition of ESG and Sustainable Investing: From Theory to Practice — Vietnam Readiness (Volume 4, NXW Investment Library).

Read Chapter 1 free Get the full book — contact@nxw.vn

Sections of this chapter

13.1 The question every ESG investor asks

13.2 Two opposite theories

13.3 ESG and the cost of capital

13.4 Evidence on returns: what the studies found

13.5 Why results depend on period and method

13.6 Evidence on risk

13.7 Flows, prices and the equity "greenium"

13.8 Separating ESG from familiar factors

13.9 What to expect: a balanced view

13.10 Evidence in Asia and Vietnam

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