Sustainable Finance: ESG/CSR, Firm Value, and Investment Returns

Xin Chang*, Kangkang Fu, Yaling Jin, Pei Fun Liem

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    18 Citations (Scopus)


    We review the burgeoning sustainable finance literature, emphasizing the value implications of ESG (environmental, social, and governance) and CSR (corporate social responsibility) practices. We use a discounted cash flow valuation framework to identify value drivers through which such practices can enhance firm value. Collectively, empirical evidence supports that they increase firm value by motivating employees, strengthening customer–supplier relationships, boosting long-term growth, increasing dividends, and reducing financing costs. Furthermore, more socially responsible firms deliver no higher excess stock returns in the long run. Green bonds neither provide issuers with a price premium nor make investors sacrifice on lower returns. Socially responsible investing (SRI) funds generate no higher risk-adjusted long-term returns than non-SRI funds. Finally, we briefly suggest several topics for future research on sustainable finance.

    Original languageEnglish
    Pages (from-to)325-371
    Number of pages47
    JournalAsia-Pacific Journal of Financial Studies
    Issue number3
    Publication statusPublished - Jun 2022

    Scopus Subject Areas

    • Finance

    User-Defined Keywords

    • Bond Returns
    • corporate social responsibility
    • CSR
    • ESG
    • Firm Value
    • Stock Returns
    • Sustainable Finance


    Dive into the research topics of 'Sustainable Finance: ESG/CSR, Firm Value, and Investment Returns'. Together they form a unique fingerprint.

    Cite this