- There is some evidence that purportedly antisocial corporate conduct can result in superior stock market performance. Firms with high carbon emissions have higher stock market returns than low carbon emitters, for example, although the result may reflect liquidity issues arising from divestment campaigns. Hao Liang & Luc Renneboog,
Corporate Social Responsibility and Sustainable Finance: A Review of the Literature14 (ECGI Finance Working Paper No. 701 2020), http://ssrn.com/abstract_id=3698631.
- A 2019 survey of CEOs and CFOs of large corporations, for example, found them almost equally divided between those who thought their companies’ ESG efforts would produce long-term gains and those who thought it would increase long-term costs. David F. Larcker et al., Seven Myths of ESG 1 (Stanford Closer Look Series, Nov. 3, 2021).
- A 2021 literature review of over 1,100 peer-reviewed studies and 27 published meta-analyses determined that the risk-adjusted financial performance of ESG investing was indistinguishable from that of conventional investing. David F. Larcker et al., Seven Myths of ESG 1 (Stanford Closer Look Series, Nov. 3, 2021).
- A 2020 study found that companies with high ESG ratings were less likely to cut CEO pay in response to the crisis than firms with lower ESG scores. Amit Batish et al.,
Sharing The Pain: How did Boards Adjust CEO Pay in Response to Covid-19?(Stanford Closer Look Series, Sept. 1, 2020).
- Many ESG-based compensation disclosures offer “vague and underspecified goals, such as increasing sustainability, diversity, inclusion, or employee well-being, without any specific targets or additional information.” Widespread proliferation of such vague metrics would further reduce CEO accountability, “as it gives them the opportunity to get rid of painful incentives and increase their pay while at the same time pretending to steer the company toward social responsibility and stakeholder welfare.” Lucian A. Bebchuk & Roberto Tallarita,
The Perils and Questionable Promise of ESG-Based Compensation17 (Mar. 1, 2022),
-
According to an evaluation by the Gibson Dunn law firm of ESG-related shareholder proposals in the 2020 proxy season, the number of proposals relating to environmental and social issues dropped by 10 and 21 percent, respectively. Average support for social proposals was 21.5%, while environmental proposals average 30.2% support.