ESG? A Framework for Corporate Governance and its Environmental, Social, and Financial Outcomes

Abstract

ESG (environmental, social and governance) is an acronym used frequently by practitioners and academics when speaking of those forms of investment and activism not focused primarily on the financial bottom line. We will argue in this paper that ESG is a problematic term, conflating as it does aspects of performance and process. Through a synthesis of literature we review how the term is used by practitioners and academics. We develop a conceptual model that explains the relationship between company performance and corporate governance mechanisms, discussing and defining terms more suited to those working in this field. We conclude by pointing to the implications of our argument for practitioners and the academy.