| dc.description.abstract | Purpose – As incorporation of ESG factors in investment-decisions are becoming increasingly popular, the amount of academic research in this area is also expanding amongst numerous dimensions. One line of inquiry is the relationship between corporate ESG-information and corresponding financial performance from an investor perspective. The purpose of this article is to explore the academic literature in this field of study.
Research framework – This literature review sets out to examine both the relationship between ESG-information and financial returns, and issues related to ESG-rating divergence presented in the academic literature. A vast number of articles were identified of which 30 from prominent peer-reviewed journals was selected.
Findings – The articles investigated presented conflicting views on the financial performance of sustainable investments, making it difficult to reach a definitive conclusion. The limited body of academic research on the ESG rating divergence create difficulty in making conclusionary remarks about its consequences and implications. However, the literature consistently advises investors to exercise caution when basing decisions on a single rating and to gather information from multiple sources.
Research limitations – Only top-tier journals or papers from prominent scholars were investigated. In addition, the key terms used to gather all reviewed papers could have been expanded.
Practical implications – Academics and investors alike could benefit from more research on the subject of ESG rating divergence and its consequences and implications for investors. Keywords – Sustainable investing, ESG ratings, ESG rating divergence, financial performance in sustainable investing
Paper type – Literature review | |
