Will ESG Integrating into Corporate and Investment Practices Lead to Negative Impact on Returns?

Chenglin Song ()
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Chenglin Song: The Experimental High School Attached to Beijing Normal University

A chapter in Proceedings of the 2025 7th International Conference on Economic Management and Cultural Industry (ICEMCI 2025), 2025, pp 545-555 from Springer

Abstract: Abstract Integrating Environmental, Social, and Governance (ESG) principles into corporate and investment practices does not necessarily lead to negative financial returns. In fact, evidences suggesting that companies with strong ESG performance may exhibit better long-term financial performance and risk[1] management. Several studies indicate that organizations emphasizing sustainability and responsible business practices can experience benefits such as improved operational efficiency, reduced regulatory risks, enhanced brand reputation, and increased access to capital. Additionally, investors are increasingly recognizing the importance of ESG factors in assessing the long-term viability and resilience of companies. It’s crucial to note that the relationship between ESG practices and financial performance[2] is complex and context-dependent. As a fact, Successful implementation of ESG initiatives requires a strategic and integrated approach, aligning the principles with the specific goals and values of organization. In summary, while the initial implementation of ESG practices may involve some costs, the potential benefits, both in terms of financial performance and broader societal impact, can outweigh these initial investments over the long term and bring sound return in both financial return and overall social economic benefits.

Keywords: ESG; Environmental; Social Responsibility; Corporate Governance; Climate Change; Sustainable Development; IRR - Internal Rate of Return; MOIC - Multiple on Invested Capital; Private Equity Fund; ESG Fund (search for similar items in EconPapers)
Date: 2025
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DOI: 10.2991/978-94-6463-888-2_53

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