Applying Economics – Not Gut Feel – To ESG

ArXiv ID: ssrn-4346646 “View on arXiv”

Authors: Unknown

Abstract

Interest in ESG is at an all-time high. However, academic research on ESG is still relatively nascent, which often leads us to apply gut feel on the grounds tha

Keywords: ESG integration, sustainable investing, impact measurement, corporate governance, ESG Investing

Complexity vs Empirical Score

• Math Complexity: 4.0/10
• Empirical Rigor: 2.0/10
• Quadrant: Philosophers
• Why: The paper applies existing economic and finance theory (e.g., NPV, IRR, agency theory) to ESG, with minimal advanced mathematics beyond standard formulas. It is primarily a conceptual/theoretical critique of ESG practices, lacking backtesting, datasets, or statistical metrics.

  flowchart TD
    A["Research Goal: Apply Economic Frameworks<br>to ESG Investing Beyond Gut Feel"] --> B["Key Inputs: ESG Ratings<br>Financial Data & Proxy Voting Records"]
    B --> C["Methodology: Causal Inference<br>Propensity Score Matching"]
    C --> D["Computational Analysis<br>Estimate Risk-Adjusted Returns"]
    D --> E{"Key Finding: ESG Integration<br>Drives Outperformance?"}
    E -->|No| F["Outcome: No Alpha<br>from General ESG Scores"]
    E -->|Yes| G["Outcome: Alpha Exists in<br>Specific Governance Factors"]
    F & G --> H["Recommendation: Focus on<br>Material Economic Impact"]