New collected essay series explores the myths and realities of the Environmental, Social and Governance (ESG) movement

ESG: Myths and Realities

• The ESG acronym stands for a range of environmental, social, and governance initiatives that critics of shareholder capitalism suggest public companies should voluntarily implement to improve the well-being of society.
• A companion development is the ongoing call for ESG-themed investing by securities regulators and professional investment managers.
• ESG (or sustainable) investing is meant to provide incentives to companies to be more socially responsible. Specifically, to the extent that investors favour “green” companies relative to “brown” companies, financial capital will flow to the former and away from the latter in a world where ESG-themed investment opportunities are available.
• There are two broad schools of thought on why companies and their investors should adopt ESG-intensive corporate and investment strategies.
• One maintains that doing so will make companies more profitable and thereby increase the net worth of their shareholders.
• The second asserts that companies have a social responsibility to implement ESG initiatives that go beyond simply complying with existing laws and regulations governing corporate behavior.
• The essays included in this series address various aspects of these two schools of thought, as well as government- and activist-led initiatives and proposals to promote ESG-themed investing specifically and stakeholder capitalism more generally.