Environmental, Social, and Governance Criteria: Why Investors are Paying Attention

Ravi Jagannathan, Ashwin Ravikumar and Marco Sammon

No 24063, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We find that money managers could reduce portfolio risk by incorporating Environmental, Social, and Governance (ESG) criteria into their investment process. ESG-related issues can cause sudden regulatory changes and shifts in consumer tastes, resulting in large asset price swings which leave investors limited time to react. By incorporating ESG criteria in their investment strategy, money managers can tilt their holdings towards firms which are well prepared to deal with these changes, thereby managing exposure to these rare but potentially large risks.

JEL-codes: G0 G12 H23 Q4 Q5 (search for similar items in EconPapers)
Date: 2017-11
New Economics Papers: this item is included in nep-env
Note: AP EEE
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Citations: View citations in EconPapers (12)

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