Return trade-offs between environmental and social pillars of ESG scores

Yusifzada, Leyla (author), Lončarski, Igor (author), Czupy, Gergely János (author), Naffa, Helena (author)

Our analysis explores the trade-off between environmental and social factors, as we observe that the environmental and social performances of firms are negatively correlated across industries. We find that, from 2013 to 2022, firms with high environmental scores but low social scores outperformed those with low environmental scores but high social scores by an average of 0.39% per month. However, this outperformance diminished when the investment horizon began in 2016. We find that in the period following 2016, public markets began to signal an equal importance for both environmental and social pillars. Therefore, policy frameworks should aim to balance both environmental and social objectives to address the disparities created by regulations that favour one aspect of sustainability over the other.

• Language: English
• Keywords: private company, investments, sustainable development, ESG investing, portfolios, sustainable finance, SRI, social sustainability, environmental sustainability
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication status: Published
• Publication version: Version of Record
• Year: 2025
• Number of pages: 21 str.
• Numbering: Vol. 75, article no. ǂ102779
• PID: 20.500.12556/RUL-176884
• UDC: 336
• ISSN on article: 0275-5319
• DOI: 10.1016/j.ribaf.2025.102779
• COBISS.SI-ID: 225527299
• Publication date in RUL: 12.12.2025

Record is a part of a journal

• Title: Research in international business and finance
• Shortened title: Res. int. bus. Financ.
• Publisher: Elsevier
• ISSN: 0275-5319
• COBISS.SI-ID: 512590361

Licences

• License: CC BY 4.0, Creative Commons Attribution 4.0 International
• Link: http://creativecommons.org/licenses/by/4.0/
• Description: This is the standard Creative Commons license that gives others maximum freedom to do what they want with the work as long as they credit the author.

Secondary language

• Language: Slovenian
• Keywords: finance, investicije, trajnostni razvoj

Projects

• Funder: Other - Other funder or multiple funders
• Project number: K-138826
• Name: K-138826

• Funder: ARIS - Slovenian Research and Innovation Agency
• Project number: P5-0161
• Name: Izzivi vlagateljev, podjetij, finančnih institucij in države v negotovem evropskem gospodarskem okolju