It’s About the Price of Oil, Not ESG

The growing urgency of climate change has increased scrutiny of companies’ ESG (Environmental, Social, and Governance) practices. Investors are now more inclined to support firms that demonstrate strong ESG commitments, often willing to pay a green premium for sustainable investments. However, is the spread in performance between the ‘Sin’ and ‘Saint’ stocks driven by the ESG factor or some other omitted variable? The recent study by Zhan Shi and Shaojun Zhang suggests that the hidden force that may be in play is the price of the oil.

https://quantpedia.com/its-about-the-price-of-oil-not-esg/