Question: Assess the performance of ESG investing against traditional investing. Explain how a firm can achieve financial benefits and social purpose through ESG investing.

ESG Investing (also known as “socially responsible investing,” “impact investing,” and “sustainable investing”) refers to investing which prioritises optimal environmental, social, and governance (ESG) factors or outcomes. In other words, ESG investing is viewed as a way of
investing “sustainably” by considering the environment and human well-being and the economy (Daugaard, 2020).
The growth in sustainable finance has been boosted by the willingness of institutional investors and funds to incorporate various ESG investing approaches. ESG investing has evolved from socially responsible investment philosophies into a distinct form of responsible investing.
Firms that pursue sustainable investing can provide investors with financial benefits while contributing to social progress (Edmans, 2021). Thus, ESG investing assumes that environmental and social factors affect the financial performance of organisations. Therefore, the empirical literature suggests that the financial and social returns associated with ESG investing are not mutually exclusive.
The essay should address the following questions.
You are expected to use sufficient academic literature and other relevant materials to support your arguments in answering the following questions.

1. Assess the performance of ESG investing against traditional investing. Explain how a firm can achieve financial benefits and social purpose through ESG investing.
2. To what extent does a firm’s shareholding (ownership) drive ESG improvements?

Reference:
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Cunha, F. A. F. D. S., de Oliveira, E. M., Orsato, R. J., Klotzle, M. C., Cyrino Oliveira, F. L., &
Caiado, R. G. G. (2020). Can sustainable investments outperform traditional benchmarks?
Evidence from global stock markets. Business Strategy and the Environment, 29(2), 682-697.
Daugaard, D. (2020). Emerging new themes in environmental, social and governance
investing: a systematic literature review. Accounting & Finance, 60(2), 1501-1530.
Dyck, A., Lins, K. V., Roth, L., & Wagner, H. F. (2019). Do institutional investors drive corporate
social responsibility? International evidence. Journal of Financial Economics, 131(3), 693-
714.
Edmans, A. (2021). Grow the Pie: How Great Companies Deliver Both Purpose and Profit–
Updated and Revised. Cambridge University Press.