Environmental, social, and governance investing is associated with lower shareholder value, according to a new study by Tracie Woidtke, head of the finance department at UT’s Haslam College of Business.
While examining the role of state and municipal pension funds as activist investors, Woidtke found the S&P 500 index firms targeted with social-issue proposals by the New York state pension fund had a 21 percent lower firm value, and a 91 percent lower industry-adjusted firm value, than all other firm years in her sample.
“Shareholders see little benefit from focus on issues like political spending, employment rights, or environmental sustainability within a company,” said Woidtke. “This has become a really hot topic with the current focus on ESG investing.”
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