Document Type

Thesis

First Advisor

Doug Nielsen

Second Advisor

Dr. Steve Case

Publication Date

5-2024

Scholarship Domain(s)

Scholarship of Discovery; Scholarship of Community Application

Abstract

The growing importance of environmental, social and governance (ESG) policies in global industries has attracted special attention from investors seeking to evaluate companies beyond traditional financial metrics. Given the evolving social climate, investors are seeking ways to utilize their money not only for financial success but for societal change. ESG offers the opportunity to retain money in the market while being responsible concerning the environmental and societal impact companies are having on the communities in which they operate. Being a responsible investor can go beyond making strong returns. This study aims to determine if there is a statistically significant difference in the returns of ESG funds between the United States and the European Union. ESG factors encompass environmental, social and governance standards, with each region exhibiting unique regulatory approaches and implementation levels. The project recognizes the current lack of universal standards in ESG assessment and the prevalence of issues of misinformation, greenwashing, and transparency in reported data. By comparing randomly selected mutual or exchange traded ESG index funds in the US and EU, the study aims to contribute to the understanding of the impact of regional regulatory variations on fund performance. Given the changing nature of ESG and its growing investment, this research provides insights into responsible and informed investment decision-making.

The global importance of this study lies in the conflicting stages of adoption and implementation of ESG initiatives in the US and EU. Though the EU has moved forward with comprehensive rules, the US is in the early stages of establishing unified regulations. The research emphasizes the need for standardized measurements and the potential risks associated with substantial investments in ESG funds. This project underscores the importance of examining ESG data from companies of all sizes and industries to understand the environments in which ESG is most effective. As ESG is developing rapidly, this research contributes to the current discourse on its credibility, implications, and suitability for different companies and environments. Ultimately, the study addresses clients’ responsibility in shaping the financial and environmental future, emphasizing the need for comprehensive analysis to discern the true impact of ESG funds on social and financial aspects.

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Download

Share

COinS