Alex Edmans, 24 August 2021

Alex Edmans of the London Business School and CEPR, author of Grow the Pie, argues there doesn't have to be a trade-off between growing value for investors and for society. But what does this mean in practice, and how strong is the evidence?

Dalya Elmalt, Deniz Igan, Divya Kirti, 23 June 2021

Sustainable investment incorporating environmental, social, and governance concerns is increasingly used as an emissions-reducing policy. However, little is known about its effectiveness. This column examines the relationship between ESG metrics and emission growth across 20 countries and finds little evidence to suggest that higher ESG metrics are associated with reduced emission growth.

Alex Edmans, 26 May 2021

In 2020, the European Commission tasked EY to study directors’ duties and sustainable corporate governance, to identify why companies focus on “short-term shareholder value maximisation rather than the long-term interest of the company”. Leading academics and practitioners have questioned the study recommendations and issued a Call for Reflection. This column highlights some of the concerns raised. “Short-term shareholder value” is an oxymoron because shareholder value is an inherently long-term concept. If short-termism is the problem, the remedy is greater focus on (long-term) shareholder value rather than less. 

Thomas Gehrig, 21 May 2021

ESG – Environmental, Social and Governance – measures of bank performance are getting a lot of attention from shareholders and policymakers. But might more investment in ESG make banks less resilient? Thomas Gehrig tells Tim Phillips what the first research on this topic reveals.

Read More here: CEPR Discussion Paper, DP15816 Social Responsibility and Bank Resiliency by Thomas Gehrig, Maria Chiara Iannino, Stephan Unger

Alex Edmans, 11 February 2021

Policymakers, investors, and stakeholders are demanding that companies report sustainability metrics so that they can be held accountable for delivering social performance. Doing so increases the total amount of information in the market and reduces the cost of capital. However, real decisions depend on not the total amount of information, but the balance between ‘hard’ (quantitative) and ‘soft’ (qualitative) information. Since sustainability metrics only contain the former, they distort this balance – skewing managers’ sustainability investments to ones with short-term payoffs.

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