The Business Case for Corporate Investment in ESG Practices

While empirical research on the link between corporate investment in environmental, social, and governance (ESG) practices and firm performance is far from undisputed, several studies have shown that a company can be rewarded for adopting these practices in the form of higher profits and stock return, a lower cost of capital, and better corporate reputation scores. This report reviews empirical analyses of the return on investment in ESG initiatives, outlines five pillars of the business case for corporate sustainability, and discusses why the positive correlations found by some academics remain disputed by others.