午夜剧场

Recently, the term "ESG investing" has become a common sight as a style of asset management. ESG stands for Environment, Social, and Governance. ESG investing refers to selecting and investing in companies that consider the environment and society and have established appropriate corporate governance systems. In response to the rise of ESG investing, companies have also begun to consider ESG and are actively communicating their initiatives.

Looking at information on the internet and elsewhere, it is often said that the returns on ESG investing will be high because companies that engage in activities considering ESG will improve their corporate value over the long term. At the same time, many point out that companies that consider ESG have lower risks.

However, can we really say that the returns on ESG investing will be high? If everyone knows at this point that the value of companies considering ESG will improve in the long term, buy orders for these companies' stocks would already be flooding in. Therefore, the future improvement in corporate value due to ESG activities should already be factored into the current stock price, making the stock price high already. Since this means the stock price at the time of purchase is high, one cannot easily conclude that the returns on ESG investing will be high. Furthermore, considering the principle of high-risk/high-return and low-risk/low-return, if the risk of companies considering ESG is low, it is more likely that the returns on ESG investing will be low. From this, it seems quite difficult to argue that the returns on ESG investing will be high.

Not only that, but it is also not easy to provide evidence that activities considering ESG improve corporate value. This is because even if a correlation is observed where companies with higher levels of ESG activity have higher corporate value, it is possible that companies with higher corporate value and more resources are the ones actively engaging in ESG activities. The claim that ESG investing not only encourages companies to consider ESG but also that ESG activities increase corporate value—resulting in higher returns on ESG investing—is very attractive. However, I feel it is necessary to organize the discussion calmly without taking it at face value.