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[The Economist] The Warm Glow

The Economist recently published a report coauthored by Andrew King, Questrom Professor of Management and Professor Strategy & Innovation, examining the effects of ESG investments on corporations and their sustainability.

Andrew King

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on

July 21, 2022

The Economist recently published a report coauthored by Andrew King, Questrom Professor of Management and Professor Strategy & Innovation, examining the effects of ESG investments on corporations and their sustainability.

It is not always a win-win situation when it comes to ESG investments. There are often tradeoffs involved in the process, which leads to questions about their value. Believed to assist companies in identifying material risks and pursuing growth opportunities, ESG investing has grown in popularity. The article highlights the data showcasing ESG measurements and different pay offs over time, emphasizing the importance of materiality. As Andrew points out, ESG investing is not always the best method to account for sustainability.

“Efficient-markets theory suggests that excess returns are always hard to find, especially when information is widely available.”

Andrew King
Questrom Professor of Management, Strategy & Innovation

Others have disputed the idea that virtue can ever be free. As virtuous investors sell out of “sinful” companies, they push share prices down, which offers buyers the prospect of higher returns- even though raising polluting companies’ capital costs should make it harder for them to make money.

Professor Andrew A. King is a leading authority on environmental performance and innovation. His research established whether and when firms can find ways to profitably reduce their impact on the environment. His empirical tests of the efficacy of industry self-regulation helped change both private and public policy. His research now explores open source innovation and knowledge sharing. Andy was an early advocate of a scholarship on what is now called “sustainability”, and his findings and methods have influenced scholars in many disciplines. With students and colleagues, he helped found some of the most important research institutions in the field, culminating in the Alliance for Research on Corporate Sustainability. Andy has been a Marvin Bower Fellow at the Harvard Business School, an Aspen Institute Faculty Pioneer, and an Academy of Management Journal Best Paper Award winner His thesis won the Massachusetts Institute of Technology’s Zannetos Prize. Andy holds a BA from Brown University, an MS from the University of California, Berkeley, and a PhD from the Massachusetts Institute of Technology.