The Performance Pattern Associated With Esg Activities

1481 Words6 Pages
Before answering the research question, it is imperative to comprehend why performance of ESG-focused funds in general should, or should not, diverge from conventional funds. The first part of this literature review, therefore, assess findings regarding the performance pattern associated with ESG activities. In the specific, the research analyzes the differences between ESG funds and conventional funds. Thereafter, the analysis moves towards the understanding and description of the social/behavioral set of rules that is encouraging the movement towards a more ESG conscious way of investing. A section regarding the direct connection between financial performance and ESG practices explores a series of relevant articles. Following this, a more detail description of Environmental, Social and Governance practices is given. This covers the core information necessary to structure the forthcoming conceptual framework; here the expatiation regarding the relationship between mutual fund returns and ESG practices are depicted. Moreover, the reasoning behind the inclusion of “ESG factor” in modern pricing models is justified. GENERAL INTRO In the past decades, SRI and ESG-focus have been heavily covered in the literature with mixed results. Bauer et al. (2002) compare performance of mutual funds that follow social responsible investment strategies against those that do not. By applying a four-factor Carhart (1997) model, the results are depends widely on the country of operation of the

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