ESG performance and investor impact in public and private equities

Andreas Gruener and Jonas Wieckert

Chapter 10 in Handbook of ESG Investing, 2026, pp 198-225 from Edward Elgar Publishing

Abstract: This chapter examines the relationship between ESG performance, corporate financial performance, and equity investors’ financial outcomes. While enhanced ESG performance is often associated with improved corporate financial performance, it does not necessarily translate into higher returns for investors. Nonetheless, investors can still benefit from and contribute to ESG improvements at the corporate level. The chapter further explores how equity investors can influence firms’ ESG performance and create meaningful impact. Our findings highlight that influencing large publicly listed firms is challenging due to inefficiencies in existing mechanisms of investor engagement. In contrast, private equity presents a more effective avenue for driving ESG improvements, offering investors greater control and direct influence over investee firms. However, private equity investments come with trade-offs, including extended lock-up periods, limited liquidity, and lower standards of ESG disclosure compared to publicly listed equities.

Keywords: ESG Performance; Financial Performance; ESG Investing; Impact Investing; Active Ownership; Private Equity (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035322770
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