Selecting energy firms with the strongest ESG records

Avoiding all energy companies

Excluding all consumer goods companies

Investing in only government bonds

Raise short-term stock prices

Verify accuracy of sustainability disclosures

Reduce company tax obligations

Increase marketing visibility

Environmental

Governance

Financial

Social

Because of short-term tax benefits

Evidence of long-term risk-adjusted outperformance

To maximize speculative trading returns

Environmental

Governance

Financial

Social

A firm publishing annual ESG disclosures with verified metrics

A company cutting energy costs through efficiency upgrades

A corporation claiming carbon neutrality without reducing emissions

A bank issuing a certified green bond for renewable projects

To maximize agent self-interest

To avoid regulatory scrutiny

To reward quick market gains

To align managerial decisions with sustainable firm growth

Reducing employee training

Investing in workplace diversity and inclusion

Minimizing health and safety protocols

Outsourcing community engagement to contractors

Rising sea levels affecting coastal offices

A flood damaging a production facility

A hurricane disrupting global supply chains

A carbon tax increasing operating costs

CSR always increases quarterly profits

CSR has no measurable impact on reputation

CSR practices reduce reputational risk and strengthen brand loyalty

CSR initiatives guarantee higher dividends