Abstract

https://ssrn.com/abstract=2840629
 


 



A Pitfall in Ethical Investing: ESG Disclosures Reveal Vulnerabilities, Not Virtues


Gerald T. Garvey


Blackrock

Joshua Kazdin


Blackrock

Joanna Nash


Blackrock

Ryan LaFond


Algert Global, LLC

Hussein Safa


Blackrock

September 19, 2016


Abstract:     
It is widely believed that ESG (Environmental, Social, Governance) investing helps reduce regulatory and reputational risks. In a large global panel, we find that ethics controversies are more likely for firms that adopt popular ESG policies. The effect is attenuated by controlling for size, industry, and country but remains economically and statistically significant. We also show that some prominent ESG indexes favor companies that disclose more ESG policies and as a consequence generally have greater controversy exposure than an ESG-unaware benchmark.

Number of Pages in PDF File: 20

Keywords: Social Responsibility; Controversies

JEL Classification: G30, G38


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Date posted: September 20, 2016  

Suggested Citation

Garvey, Gerald T. and Kazdin, Joshua and Nash, Joanna and LaFond, Ryan and Safa, Hussein, A Pitfall in Ethical Investing: ESG Disclosures Reveal Vulnerabilities, Not Virtues (September 19, 2016). Available at SSRN: https://ssrn.com/abstract=2840629

Contact Information

Gerald T. Garvey (Contact Author)
Blackrock ( email )
Level 37, Chifley Tower
2 Chfiley Square
Sydney, NSW 2000
Australia
+61 2 9272 2388 (Phone)
Joshua Kazdin
Blackrock ( email )
400 Howard Street
San Francisco, CA 94105
United States
Joanna Nash
Blackrock ( email )
400 Howard Street
San Francisco, CA 94105
United States
Ryan LaFond
Algert Global, LLC ( email )
One Maritime Plaza
Suite 1525
San Francisco, CA 94111
United States
Hussein Safa
Blackrock ( email )
400 Howard Street
San Francisco, CA 94105
United States
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