Comparative analysis of long-term returns, financial considerations, and measurement challenges in future ESG investing

Olakunle Oloruntobi (), Adel Gohari, Safizahanin Mokhtar (), Kasypi Mokhtar () and Siti Marsila Mhd. Ruslan
Additional contact information
Olakunle Oloruntobi: Universiti Malaysia Terengganu
Adel Gohari: Universiti Malaysia Terengganu
Safizahanin Mokhtar: Universiti Teknologi Malaysia
Kasypi Mokhtar: Universiti Malaysia Terengganu
Siti Marsila Mhd. Ruslan: Universiti Malaysia Terengganu

Journal of Asset Management, 2025, vol. 26, issue 3, No 3, 297 pages

Abstract: Abstract ESG investing, targeting financial and social gains, is influenced by a company’s natural resource usage, greenhouse gas emissions, pollution, energy efficiency, and sustainability. This study used various methods to evaluate if ESG investing boosts long-term returns by considering future financial data affecting returns and risks. Current ESG-managed assets surpass $11 trillion (T), 20% of US professionally managed assets, and are projected to exceed $82T globally. The number of new ESG funds increased from 140 in 2012 to 562 in 2022, indicating high investor demand for ESG products. Due to different methodologies, significant ESG score variations from major providers affect issuers’ results and investor decisions, leading to exposure differences in high-ESG funds. The study found a weak correlation between ESG ratings from various agencies and market indices, questioning their reliability in measuring company sustainability or risk. This suggests that differing and unclear methodologies among agencies cause rating variability. These findings are important for corporate sustainability stakeholders, investors, and analysts.

Keywords: ESG investing; Portfolios; Risk management; ESG disclosure; Stakeholder (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1057/s41260-025-00397-0 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:assmgt:v:26:y:2025:i:3:d:10.1057_s41260-025-00397-0

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/41260

DOI: 10.1057/s41260-025-00397-0

Access Statistics for this article

Journal of Asset Management is currently edited by Marielle de Jong and Dan diBartolomeo

More articles in Journal of Asset Management from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().