Date of Graduation

5-2022

Document Type

Thesis

Degree Name

Bachelor of Science in Business Administration

Degree Level

Undergraduate

Department

Finance

Advisor/Mentor

Santamaria, Sergio

Abstract

Over the past decade, Environmental, Social, and Governance (ESG) oriented funds have seen a dramatic increase in inflows and many investors have chosen to replace traditional holdings with sustainable ones. Within 5 years, it is projected that ESG exchange traded funds and mutual funds will exceed $53 trillion. Many fund managers claim that ESG funds will outperform traditional funds in the long run. If this claim is accurate, many asset managers would have a fiduciary duty to invest in ESG products. While there is often a non-financial benefit to investing in ESG funds, this paper challenges the claim that they offer a higher risk- adjusted return. By examining the holdings, performance, and expense ratios of non-ESG and ESG funds as well as relying on supporting academic research, this paper concludes that ESG funds offer no statistically significant outperformance over their non-ESG benchmarks.

Keywords

ESG, ESG Investing, ESG Returns

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