Strategic Insights: How Environmental, Social, and Governance Factors Shape Portfolio Investments

Abstract

This study aims to explore the intricate effects of environmental, social, and governance (ESG) factors on investment portfolios using a meta-analysis and meta-regression methodology. The objective is to gain insights into how ESG factors impact both investors and companies, contributing to a nuanced understanding of the relationship between financial performance and responsible business practices. Utilizing meta-analysis and meta-regression techniques, the study systematically analyzes a wide array of literature on the impact of ESG factors on investment portfolios, aggregating empirical studies, case analyses, and theoretical frameworks from academic journals and industry reports to identify patterns and trends through rigorous meta-regression analysis. The findings of this study provide compelling evidence in support of a sustainable performance premium associated with companies prioritizing robust ESG practices. Companies with higher ESG ratings consistently demonstrate sustainability, effective risk management, and strong financial performance. The meta-analysis highlights the significant influence of institutional investors, regulatory developments on ESG disclosures, and sector-specific nuances, enabling investors to capitalize on the advantages of sustainable performance and risk mitigation linked to ESG factors. The study suggests that aligning with robust ESG practices can help corporations attract institutional capital, navigate regulations, and inform policymakers about frameworks promoting responsible investments and sustainable practices.