American vs. European comparison: What are the standards and practices to rank a firm according to the ESG Environmental criteria ?
Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
Interestingly, this is caused by the strong positive return of firms with the lowest ESG activity. ESG investing grew out of investment philosophies such as Socially Responsible Investing (SRI), but there are key differences. ESG investing and analysis, on the other hand, looks at finding value in companies—not simply at supporting a set of values.
Christina E. Bannier, Yannik Bofinger, Björn Rock. Doing safe by doing good : ESG investing and corporate social responsibility in the U.S. and Europe. Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 621. 2019
Lopez de Silanes, Florencio and McCahery, Joseph A. and Pudschedl, Paul C., ESG Performance and Disclosure: A Cross-Country Analysis (December 18, 2019). TILEC Discussion Paper No. DP2019-032;
Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage. Daniel C. Esty, Andrew S. Winston, reprint, Yale University Press, 2006