The ESG Initiative at the Wharton School
Conducting rigorous and practically relevant research that investigates the interaction between ESG factors and business, offering actionable solutions for leaders.
Featured ESG Research
A New Way of Seeing Value: Introducing the Engine No. 1 Total Value Framework
Investors shouldn’t have to choose between a portfolio’s long-term financial return and its positive global impact. Enter: The Engine No. 1 Total Value Framework, which directly ties environmental, social, and governance impacts to financial value creation. Co-authored by Witold J. Henisz, Vice Dean and Faculty Director of the ESG Initiative, this white paper takes a data-driven approach that integrates non-traditional but financially material ESG data, methods, and systems into traditional analysis.
Walking the Talk: Valuing a Multi-Stakeholder Strategy
A new study, published by FCLTGlobal and ESG-I, analyzes the annual reports of over 3,000 global companies to look for stakeholder-oriented language, and compares the presence of that language with financial, environmental, social, and governance outcomes. The data shows that if all the companies in the study performed like the top tercile, they would have generated a collective $2.9 trillion in additional firm value between 2010-2020.
Where Do Brown Companies Borrow From?
Using a structural model of credit risk, Wharton Professors Sergey Sarkisyan and Irina Luneva show that for low-ESG-rated firms, it is less expensive to borrow from banks than from public market compared to high-ESG-rated firms. They conclude that both loan and bond markets offer higher costs of debt to brown firms, but the bond market’s “punishment” is higher than the loan market’s.
Featured Environmental Research
Formative Experiences and the Price of Gasoline
Gas prices continue to climb, surpassing $6/gallon in some U.S. states. For today’s teenage drivers, the reverberations of these price shocks will be felt for years to come. According to a new study by Chris Severen, a senior economist at the Federal Reserve Bank of Philadelphia, and Arthur van Benthem, Wharton professor of business economics and public policy, oil crises during your formative years shape driving behavior later in life.
Banks and Climate Governance
Major banks in the United States and globally have begun to assert an active role in the transition to a low-carbon economy and the reduction of climate risk through private environmental and climate governance. This Essay by Sarah E. Light, Associate Professor of Legal Studies & Business Ethics and her coauthor, Christina P. Skinner, situates these actions within historical and economic contexts: It explains how the legal foundations of banks’ sense of social purpose intersect with their economic incentives to finance major structural transitions in society. In doing so, this Essay sheds light on the reasons why we can expect banks to be at the center of this contemporary transition.
Featured Governance Research
CPA-Zicklin Index of Corporate Political Disclosure and Accountability
The CPA-Zicklin Index of Corporate Political Disclosure and Accountability depicts a strong and growing trend among S&P 500 companies that are placing restrictions on political spending, devising clear policies to govern such spending, and enhancing board oversight of public company engagement in the political process.
When Are Organizations Punished for Organizational Misconduct? A Review and Research Agenda
Wharton Professors Mary-Hunter “Mae” McDonnell and Samir Nurmohamed review sociological and macro-organizational work that suggests punitive severity can vary with three key attributes of the organization: status, reputation, and embedded ties.