In the last decade, there has been a push to make companies into better corporate citizens, cognizant of their societal obligations. That push has led to measures of corporate goodness, with ESG (Environmental, Social and Governance) indicators being used to judge how companies measure up. The advocates for ESG have won over many in the establishment, with CEOs and institutional investors, all buying in, and their sales pitch has been alluring. ESG, they have argued, will be all things good for everyone involved: good companies become more profitable and valuable, investors in these companies will be enriched and society will benefit. At the risk of being labeled as morally deficient, I believe that ESG has been overhyped and oversold, and that many of the claims made about its value are debatable, internally inconsistent or questionable. I also believe that, unless we have an open debate about what ESG can and cannot do for companies, investors and society, a lot of money will be spent on ESG, a few people (consultants, ESG experts, ESG measurers) will benefit, but companies will not be any more socially responsible than they were before ESG entered the business lexicon.
Slides: http://www.stern.nyu.edu/~adamodar/pd...
Paper (with Brad Cornell): https://papers.ssrn.com/sol3/papers.c...