Corporate investment in ESG practices has been widely investigated in recent years. Studies show that a business corporation may benefit from these resource allocations on multiple levels, ranging from higher market and accounting performance to improved reputation and stakeholder relations. However, poor data quality and the lack of a universally adopted framework for the disclosure of extra-financial information have hindered the field of research.
This Director Notes — a free publication — reviews empirical analyses of the return on investment in ESG initiatives, outlines five pillars of the business case for corporate sustainability, and discusses why the positive correlations found by some academics remain disputed by others.
Many companies are committed to ESG policies, a growing minority remain skeptical about their benefits, according to an October 2014 report from the Economist Intelligence Unit.