Work

Environmental, social, and governance (ESG) scores and portfolio performance: evidence from South Africa

Year: 2025

Type: article

Abstract: The study examines the impact of Environmental, Social and Governance (ESG) ratings on portfolio performance. In addition to using the individual ESG components, we also overcome the shortcomings of an alpha-based performance evaluation by applying a wide range of portfolio performance indicators and examine how the performance indicators vary over different time periods. Using data from the Johannesburg Stock Exchange, over the period 2012 to 2022, the study found that portfolios with higher ESG scores have superior returns, particularly at the wake of the COVID-19 pandemic. The findings suggest that ESG fund construction should not be overlooked, and that portfolio managers who consider ESG ratings in stock selection may achieve better overall fund performance.

Source: Journal of Applied Economics

DOI: 10.1080/15140326.2025.2464507

Authors: Jared A. Short, Godfrey Ndlovu

Institution: University of Cape Town

Language: English

Topic: Corporate Social Responsibility Reporting

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $1,533

Funder: University of Capetown