Valuing ESG: Doing Good or Sounding Good?

29 Pages Posted: 19 Mar 2020

See all articles by Bradford Cornell

Bradford Cornell

Anderson Graduate School of Management, UCLA

Aswath Damodaran

New York University - Stern School of Business

Date Written: March 20, 2020

Abstract

In the last decade, companies have come under pressure to be socially conscious and environmentally responsible, with the pressure coming sometimes from politicians, regulators and interest groups, and sometimes from investors. The argument that corporate managers should replace their singular focus on shareholders with a broader vision, where they also serve other stakeholders, including customers, employees and society, has found a receptive audience with corporate CEOs and institutional investors. The pitch that companies should focus on “doing good” is sweetened with the promise that it will also be good for their bottom line and for shareholders. In this paper, we build a framework for value that will allow us to examine how being socially responsible can manifest in the tangible ingredients of value and look at the evidence for whether being socially responsible is creating value for companies and for investors.

Keywords: ESG, Valuation, Corporate Governance, Stakeholder Wealth Maximization, CSR

JEL Classification: G00, G11, G30

Suggested Citation

Cornell, Bradford and Damodaran, Aswath, Valuing ESG: Doing Good or Sounding Good? (March 20, 2020). NYU Stern School of Business. Available at SSRN: https://ssrn.com/abstract=3557432 or http://dx.doi.org/10.2139/ssrn.3557432

Bradford Cornell

Anderson Graduate School of Management, UCLA ( email )

Pasadena, CA 91125
United States
626 833-9978 (Phone)

Aswath Damodaran (Contact Author)

New York University - Stern School of Business ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
212-998-0340 (Phone)
212-995-4233 (Fax)

HOME PAGE: http://www.damodaran.com

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