ESG Reflective Report

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ESG Reflective Report

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Themes

csr corporate social responsibility, environment, social, governance, investment, business, company, bank, economic growth, sustainable finance

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Abstract

In an analysis entitled "Risk-return performance of optimized ESG equity portfolios in the NYSE" written by Javier Lopez Prol and Kiwoon Kim and published in 2022, the authors find that High ESG optimized portfolios have lower returns and volatility than lower ESG ones (Prol & Kim, 2022). In this sense, it would seem that companies with "ESG" guidelines perform less well than companies with a single Classical objective: to make a profit.

Introduction
Common criticism of ESG investments ("The Social Responsibility of Business Is To Increase Its Profits")
The business case for ESG investments ("Growing the Pie")
Industry profile (e.g., manufacturing, retail, transportation, or hospitality industry): Key ESG challenges
1. Company A of the chosen industry: Société Générale
2. Company B of the chosen industry: ESG profile
3. Comparison between companies A and B's ESG profile: sustainable finance remains limited
Conclusion

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Extract

[...] If this economic agent seeks to meet other objectives, then it may not optimally meet the main objective. Indeed, the very idea that a company's sole purpose is to create profit was highlighted by economist Milton Friedman in an article published in New York Magazine in 1970 and again in 2007 (Friedman, 2007). According to the American economist, a company's core business should not be affected by secondary objectives - such as ESR objectives - as this would have an impact on the company's profit, especially in a competitive environment. [...]

[...] This could lead to an increase in ESG investments and their profitability. 1.3. Industry profile (e.g., manufacturing, retail, transportation, or hospitality industry): Key ESG challenges In order to have a better understanding of ESG-related issues, we decided to study companies operating in the banking sector. In fact, these companies can give us a better understanding of ESG issues, as well as giving us a concrete idea of what is being done to promote environmental, social and responsible issues. We will therefore analyze the profile of two French banks: Société Générale and BNP Paribas. [...]

[...] Indeed, it's an issue that needs to be taken into account by companies, particularly in order to be able to "grow the pie". However, when we look at the data, we see that this is not always the case. As a result, companies now need to take better account of this issue, in particular by examining the actions they are taking and their influence on growth. Bibliography - de Freitas Netto, S. V., Sobral, M. F. F., Ribeiro, A. R. B., & Soares, G. R. [...]

[...] In this sense, it would seem that companies with "ESG" guidelines perform less well than companies with a single Classical objective: to make a profit. To understand this issue, we first need to define and structure what we mean by ESG. As Ryan Thomas Trahan and Brad Jantz point out, the notion of ESG is a semantic construction designed to bring together three terms: "environmental, social and governance" to construct a broader approach to a company's function. Indeed, a company that takes ESG criteria into account - and therefore criteria related to social, environmental and governance aspects within a company - must change its structure and operating mode to ensure that it has an impact on the environment that is not negative, that respects fair governance and that can also have a constructive social dialogue within its structure (Trahan & Jantz, 2023). [...]

[...] (2023). What is ESG? Rethinking the pillar. Business Strategy and the Environment. - Yergin, D. (2020). The new map: Energy, climate, and the clash of nations. Penguin Uk. [...]

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