In some big markets, investors actually value 'green' companies less because they see environmental spending as just another bill to pay.
March 25, 2026
Original Paper
The Impact of ESG Performance on Corporate Value: Aggregate ESG Scores and Evidence from China
SSRN · 6463181
The Takeaway
While Western logic suggests 'doing good' leads to 'doing well,' this study of thousands of firms shows that in markets where traditional financial metrics dominate, high ESG performance can act as a negative signal to the market.
From the abstract
Environmental, Social, and Governance (ESG) factors are increasingly recognized as critical determinants of corporate valuation. Nevertheless, the existing literature offers no consensus on the relationship between ESG performance and corporate value, largely due to substantial discrepancies across ESG ratings from different agencies. This paper attempts to address this issue by constructing aggregate ESG scores and using them to re-examine the ESG-value relationship. Drawing on four prominent E