On December 15, 2015 Gunnar Friede, Deutsche Asset & Wealth Management; Timo Busch, University of Hamburg; and Alexander Bassen, University of Hamburg, published in the Journal of Sustainable Finance & Investment groundbreaking research on ESG and financial performance. Their research analyzes and aggregates evidence from more than 2,000 empirical studies.
The abstract of the article reads as follows:
“The search for a relation between environmental, social, and governance (ESG) criteria and corporate financial performance (CFP) can be traced back to the beginning of the 1970s. Scholars and investors have published more than 2000 empirical studies and several review studies on this relation since then. The largest previous review study analyzes just a fraction of existing primary studies, making findings difficult to generalize. Thus, knowledge on the financial effects of ESG criteria remains fragmented. To overcome this shortcoming, this study extracts all provided primary and secondary data of previous academic review studies. Through doing this, the study combines the findings of about 2200 individual studies. Hence, this study is by far the most exhaustive overview of academic research on this topic and allows for generalizable statements. The results show that the business case for ESG investing is empirically very well founded. Roughly 90% of studies find a nonnegative ESG–CFP relation. More importantly, the large majority of studies reports positive findings. We highlight that the positive ESG impact on CFP appears stable over time. Promising results are obtained when differentiating for portfolio and nonportfolio studies, regions, and young asset classes for ESG investing such as emerging markets, corporate bonds, and green real estate.”
You may download the article from the Journal of Sustainable Finance & Investment internet site.
Separately, the findings are described in a December 2015 presentation entitled, “ESG and Corporate Financial Performance: Mapping the global landscape.” You may download the presentation from the Deutsche Asset & Wealth Management internet site.