Green Bucks: Does Sustainability Pay Off for Corporations and Investors?

Sustainability efforts, which can be represented using an ESG score, are emerging as one of the most important trends across the world. The importance of understanding the impact of these sustainability efforts can’t be emphasised enough as the number of global assets allocated to sustainability surpassed the trillion dollar mark. This paper will first provide an introduction to the overall concept of ESG and the aim of the paper. This paper will then analyse the trends of the financial health of corporations coinciding with improved sustainability practices through the analysis of several published empirical research papers as well as articles and journals published to determine whether a more sustainable environment is beneficial for investors and corporations. This paper concludes by analysing the beliefs of renowned economist Milton Friedman in relation to corporate responsibility and mapping out a timeline to mark the key events in sustainability and display the growth of sustainability to its modern-day equivalent. The paper will dwell on the impact on ROA, the impact on consumers, innovation and perception and question the accuracy and the process behind sustainable investments and ratings.