Abstract

Sin stocks and ESG scores: Does the nature of your business really matter?

Highlights

  • Corporate social responsibility (CSR) has become an important topic in business

  • From the companies that have been included in our sample, we identified that 94 of them belong to the tobacco, alcohol, defense, and gaming industries which belong to GICS the consumer discretionary (23.40%), consumer staples (40.43%) and industrial sectors (36.17%).When we compare the average rank scores for the different sectors, we find that the average ESG score for sin stocks in the consumer discretionary sector was 40.73 %, consumer staples 60.04 %, and industrials 53.96 %

  • We summarize the results of our regression using equation (1) where we control for company and year effects (Table 4)

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Summary

Introduction

Corporate social responsibility (CSR) has become an important topic in business. One of the top concerns of most companies lies on how their business activities affect society as a whole. One common measure that many investors use to rank CSR is the environmental, social, and governance (ESG) index. The author has found that in the majority of the mutual funds interviewed, any strategy concerning ESG compliance in their investments was accomplished through third parties. In the case of 70 % of the investment companies in the sample, it was possible that ESG investments were done without any real evidence of compliance by the companies the funds invested in (Cappucci, 2018)

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