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Research papers on ESG investing and returns

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  2. ESG performance, herding behavior and stock market returns: evidence from Europe

    Nektarios Gavrilakis, C. Floros · 2023 · Operational Research · 93 citations

    This paper tests how financial performance indicators and combined ESG score for large-cap stocks impact on stock return. In particular, we examine how market capitalization, price to book value, Sharpe ratio and ESG score of large-cap firms in Europe are related to their stock performance. We consider a panel data consisting of six European countries—Portugal, Italy, Greece, Spain, France and Germany—for the period 2010–2020. For Greek and French firms, a firm’s size tends to negatively affect its stock returns. The investors in European countries (except Italy) do not jeopardize their returns by investing in highly ESG scoring firms. We argue that the benefit of not investing in highly ESG

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  3. ESG Investing: A Statistically Valid Approach to Data-Driven Decision Making and the Impact of ESG Factors on Stock Returns and Risk

    Kamurthi Ravi Teja, Chuan-Ming Liu · 2024 · IEEE Access · 15 citations

    This study examines the impact of environmental, social, and governance (ESG) factors on economic investment from a statistical perspective, aiming to develop a tested investment strategy that capitalizes on the connection between ESG factors and financial performance. ESG investing: A statistically valid approach to data-driven decision-making (ESGI-SVADDM) investment strategy is based on a rigorous, statistically valid approach that utilizes data, math, statistics, and data science libraries to drive investment decisions, eliminating the need for personal opinions and subjectivity. The process includes establishing an investment thesis, formulating testable hypotheses (HPS), retrieving and

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  4. Performance of Equity Mutual Funds considering ESG investments, Financial Constraints, and the COVID-19 Pandemic

    T. Guimarães, R. Malaquias · 2023 · Brazilian Business Review · 12 citations

    In this paper, we analyzed the risk-adjusted performance of fUnds related to Environmental, Social and Governance (ESG-related funds), considering periods of financial constraints and the COVID-19 Pandemic. The database is comprised of3,840 equity mutual funds in the period from January/2006 to December/2020. Each year, considering daily returns, we employed the Returns-Based Style Analysis to classify each fund as an ESG-related fund or a conventional fund;all funds in the category Equities - Sustainability / Governance were also considered as ESG-related mutual funds. Using daily data, for each year, the performance was estimated based on the fourfactors model. The main results indicate th

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  7. The Impact of ESG Investing on Portfolio Performance: An Empirical Study of Emerging Markets

    Vivek Bhatia, Sanjeev Kumar · 2024 · Journal of Informatics Education and Research · 5 citations

    ESG investment, which stands for environmental, social, and governance investing, has become an important strategy in the global financial markets, and its applications are becoming more relevant in developing nations. This study investigates the impact of environmental, social, and governance (ESG) integration on portfolio performance in emerging markets. The study aims to accomplish three primary objectives: evaluating the performance of ESG-compliant portfolios in comparison to non-ESG portfolios; determining whether ESG factors enhance risk-adjusted returns; and identifying the challenges and opportunities associated with ESG investing. The study takes a quantitative approach, making use

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  8. Comparative Analysis of ESG-Focused DeFi Protocols and Traditional ESG Funds: Financial Performance, Transparency, and Impact Assessment

    Jude Enajero · 2024 · International Journal of Advances in Engineering and Management · 5 citations

    The intersection of Environmental, Social, and Governance (ESG) investing and decentralized finance (DeFi) introduces innovative pathways for integrating sustainability into financial markets. This study conducts a comparative analysis of ESG-focused DeFi protocols, such as KlimaDAO and Regen Network, and traditional ESG investment funds, including the Vanguard ESG U.S. Stock ETF and BlackRock Sustainable Advantage Large Cap Core Fund. Using data from March 2021 to March 2023 and quantitative methods such as ordinary least squares (OLS) regression, the study evaluates financial performance, transparency, and impact assessment. Results indicate that ESG-focused DeFi protocols provide enhanced

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  9. ESG impact on financial corporate performance and portfolio returns: evidence of Australia and Japan

    Margarita Chrissanthi Kazakakou Powaski, Carolina Daza Ordoñez, Laura Jáuregui Sánchez · 2021 · Vinculatégica · 4 citations

    Environmental, Social, and Governance investing has undergone a radical shift; companies and investors have focused on the impact of the disclosure of the practices and policies related to the environment, social responsibility, and governance in their operational strategies and investment. The purpose of this paper is to demonstrate the impact that the ESG policies have on public companies' stock returns in Australia and Japan. Accounting and market-based measures are used to determine the impact ESG practices have on stock market index returns. The annual data used is of companies from Australia's S&P/ASX Index and Japan's Nikkei 225 Index, covering the period from 2005 to 2019. Fixed effe

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  11. Non-Financial Factors and Financial Returns: The Impact of Linking ESG Metrics to Executive Compensation on Corporate Financial Performance

    Tengteng Ding, Yiqiang Zhou, Lianghua Chen · 2025 · Sustainability · 3 citations

    Although the practice of linking Environmental, Social, and Governance (ESG) metrics to executive compensation (ESG compensation) has become increasingly common worldwide, consistent evidence of its economic consequences for corporate value remains limited. Drawing on agency theory and a sustainable governance perspective, this study examines how responsibility-oriented incentive mechanisms translate into corporate financial performance. Using textual data from a large sample of Chinese listed companies and employing the BERT deep learning model for empirical analysis, the results show that ESG compensation significantly improves subsequent financial performance. Further analysis reveals tha

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  12. Impact of ESG (Environmental, social, and governance) investing on financial performance in Bangladesh

    Tamim Forhad Shuvo, M. Habib · 2025 · Supply Chain Research · 2 citations

    Environmental, Social, and Governance (ESG) practices have become increasingly important in driving sustainable and resilient financial performance, particularly in emerging markets like Bangladesh. This study examines the impact of ESG integration on both financial and non-financial outcomes across key sectors, including banking, textiles, energy, and telecommunications. Using a mixed-methods approach, it combines quantitative analysis of return metrics, volatility, and higher-order statistical moments with qualitative insights from ESG disclosures and corporate case studies. The results show that ESG-compliant firms consistently outperform traditional counterparts, demonstrating higher ret

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  13. ESG Investing – An Evolving Paradigm of Sustainability and Returns

    G. Gupta · 2025 · International Journal For Multidisciplinary Research · 2 citations

    This paper examines the evolution, implementation, and impact of Environmental, Social, and Governance (ESG) investing in global financial markets. Drawing upon secondary data from international and Indian contexts, it explores ESG’s historical development, key reporting frameworks (UN PRI, GRI, SASB), and regional adoption trends across Europe, the United States, and Asia. The study assesses ESG’s influence on financial performance, risk mitigation, corporate accountability, and sector-specific practices in energy, manufacturing, and technology. While evidence suggests ESG integration can enhance long-term returns, reduce volatility, and strengthen stakeholder trust, the paper also highligh

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  14. Measuring the impact of ESG investing on the stock performance of JSE-listed financial service providers during the Covid-19 pandemic

    Khwazi Magubane, Boingotlo Wesi · 2023 · International Journal of Research in Business and Social Science (2147- 4478) · 2 citations

    The study's objective is to examine the impact of ESG investing on the stock performance of financial service providers in South Africa (SA) during the COVID-19 pandemic. This has significant ramifications for the usefulness of ESG investing during a crisis period. To this end, the study employs the panel nonlinear autoregressive distributed lags (PNARDL). The study finds that ESG investing had a significant impact on stock performance. The error term in the PNARDL reveals that the share price of financial service providers in SA was significantly affected by ESG investing. The PNARDL shows that, on average, a 1 percent increase in ESG investing increased stock price returns by 5 percent, ce

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  15. Green Finance and ESG Investing: Aligning Profit with Sustainability

    Sreeram Daida · 2024 · European Economic Letters (EEL) · 1 citations

    Green finance and ESG (Environmental, Social, and Governance) investing are transforming the financial landscape by integrating sustainability into traditional financial decision-making. This paper explores the principles, mechanisms, and impacts of green finance and ESG investing, emphasizing how they help align economic profit with environmental and social responsibility. By analyzing current practices, policy frameworks, and case studies, the study assesses the performance of ESG investments and their implications for sustainable development. The research highlights the growing demand for responsible investing and the shift from short-term profit maximization to long-term value creation.

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  16. Impact Investing in NSE-Listed ESG Indices: Abnormal Returns, Calendar Effects, and GARCH-Based Volatility Dynamics in the Indian Stock Market

    S. Maheshwari, D. R. Naik, R. Garg · 2026 · Journal of Risk and Financial Management · 1 citations

    This study examines the risk–return performance of Nifty100 ESG and the Nifty Enhanced ESG equity indices listed on India’s National Stock Exchange (NSE) relative to the conventional Nifty 100 benchmark from April 2011 to June 2023. Rather than asserting formal “abnormal returns” in the asset-pricing sense as per CAPM or multi-factor alpha estimation, this study documents systematic return outperformance and time-varying volatility dynamics using unit root tests, month-of-the-year dummy regressions with ARIMA error correction, and GARCH-family conditional volatility models. The two ESG indices delivered cumulative returns much higher than the broader Nifty 100 index. Conditional volatility p

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  17. ESG, financial and macroeconomic indicators affecting stock returns: Evidence from India’s Nifty100 ESG Index

    Maithil Naik, Swati Bhat, Pooja Shanbhag, et al. · 2026 · Investment Management and Financial Innovations · 1 citations

    Type of the article: Research ArticleAbstractESG investing has emerged as a key factor in corporate strategy and capital investment, although its effects on stock returns in emerging markets such as India remain inconclusive. This paper investigates the effects of ESG scores and the financial performance of firms on the stock returns of firms in the Indian Nifty100 ESG Sector Leaders Index. Based on balanced panel data on 14 firms for 2015–2024, the study employs pooled OLS, random-effects, and fixed-effects models, conducts the Breusch-Pagan LM and Hausman tests to determine the appropriate specification, and finally estimates a two-way fixed-effects model. The empirical findings show that

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  18. ESG Investing: Evaluating the Financial Performance of Sustainable Portfolios

    Dini Ayu Pramitasari · 2024 · Equator Journal of Management and Entrepreneurship (EJME)

    This research examines the financial performance of ESG (Environmental, Social, Governance) portfolios compared to traditional non-ESG portfolios, focusing on their returns, volatility, and risk management. A qualitative approach was employed, utilizing a literature review and analysis of historical data from ESG reports and financial databases, particularly the FTSE4Good Index. The findings indicate that ESG portfolios significantly outperform traditional investments, with an average annual return exceeding conventional portfolios by approximately 4.3%. Additionally, ESG portfolios exhibit lower volatility and reduced drawdowns during market downturns, demonstrating their resilience and ris

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  19. ESG Investing: Can Ethics and Returns Go Hand-in-Hand?

    A. Mittal · 2025 · International Journal of Social Science and Economic Research

    Rising concerns around climate change, social equity, and corporate accountability—combined with evolving regulatory frameworks—have accelerated the growth of sustainable investing. At the forefront of this shift are Environmental, Social, and Governance (ESG) funds, which integrate ethical principles into financial decision-making. These funds are gaining momentum as investors increasingly seek portfolios that not only generate competitive returns but also align with their personal values. This research explores whether ESG investing successfully balances ethics with financial performance and assesses its potential to redefine traditional investment priorities in a rapidly changing global l

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  20. A Statistical Review of the KLD Database for SRI /ESG Investing and More Effective Portfolio Selection: Warning, SRI is Not Only for "Do-Gooders", but for Investors Seeking to Maximize Active Returns Relative to Risk!

    X. Guerard · 2026 · Wilmott

    Environmental factors are increasingly influencing investment decisions through environmental, social, and governance (ESG) criteria. This trend is reflected in reports, such as the US Social Investment Forum Foundation's 2020 Trends Report, which shows a significant rise in investments guided by environmental considerations. However, for pension fiduciaries, the focus is still the financial well-being of beneficiaries. They need to balance social responsibility and financial performance, often measured by the Sharpe Ratio. Robust regression is used in stock selection modeling to maximize the Sharpe and Information Ratios. Outliers are present in most financial and economic data. This paper

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  21. The Evolution of ESG Investing: Performance, Measurement, and Key Challenges- A Systematic Review

    Fahad Ullah Khan, Asad Amin · 2026 · International Journal of Innovative Research in Computer Science and Technology

    Environmental, Social, and Governance (ESG) investing has grown rapidly in the global financial market. It began as an ethical approach to investment but is now being implemented by investors across the board to maximize financial returns as well as to support ethical business practices. However, the research findings on ESG performance are not always consistent. Many studies also are raising concerns about how ESG is measured and reported. This systematic review explores the development of ESG investing and how it is related to financial performance, and the major challenges of ESG measurement. The review is based on the PRISMA guidelines for a transparent and structured process. Relevant s

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  22. Artificial Intelligence and Sustainability Reporting: Performance Outcomes in ESG Investing

    Lin Oktris, S. Az-zahra, N. Nengzih, et al. · 2026 · EQUITY

    The convergence of artificial intelligence and sustainable finance represents a fundamental transformation in investment decision-making, yet empirical evidence concerning effectiveness remains fragmented across diverse research domains. This study synthesises evidence from 43 peer-reviewed investigations spanning 2020 to 2024, examining artificial intelligence applications in environmental, social, and governance investing through systematic meta-analysis following PRISMA 2020 guidelines. Random-effects models demonstrate that artificial intelligence technologies significantly enhance risk-adjusted financial returns (standardised mean difference = 0.58; 95% confidence interval: 0.44-0.72; p

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  23. Linking ESG Ratings Aspects to Financial Performance: A Study of the Shift from Profit-Driven to Sustainable Industries

    Priti Sharma, R. Malhotra, Himani Upreti, et al. · 2026 · 2026 5th International Conference on Innovative Practices in Technology and Management (ICIPTM)

    In recent years there is a change in traditional profit maximization models towards environmental, social and climate matter. Environmental, Social and Governance (ESG) criteria has become an important aspect in defining whether a company can deliver long-term value to its shareholders while complying with its corporate social responsibility. The objective of ESG practices is that it ensures companies operate in an ethical manner and produce profits and returns to the shareholder's equity whilst adhering to government regulations. This paper studies the relationship between the Environmental, Social and Governance widely-known as the ESG Rating and the financial performance of the firms thro

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  24. Navigating Uncertainty in ESG Investing

    Jiayue Zhang, Ken-Seng Tan, T. Wirjanto, et al. · 2023

    The widespread confusion among investors regarding Environmental, Social, and Governance (ESG) rankings assigned by rating agencies has underscored a critical issue in sustainable investing. To address this uncertainty, our research has devised methods that not only recognize this ambiguity but also offer tailored investment strategies for different investor profiles. By developing ESG ensemble strategies and integrating ESG scores into a Reinforcement Learning (RL) model, we aim to optimize portfolios that cater to both financial returns and ESG-focused outcomes. Additionally, by proposing the Double-Mean-Variance model, we classify three types of investors based on their risk preferences.

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