The Impact of ESG on Stock Prices

This research focuses on the impact of ESG (environmental, social and corporate governance) on stock prices. Such studies are needed because of the current trend toward increased attention to environmental and social problems. In this study, the concepts of corporate social responsibility (CSR) and ESG are equivalent and mean the company's activities aimed at improving the environmental and social environment. The aim of this work is to check the readiness of the stock market to socially responsible activities of companies. In order to achieve this aim, we use following methods: event study, structural breaks analysis, and the analysis of the socially responsible investing portfolio. The results of the study are ambiguous. There is a strong positive long-term relationship between ESG and stock prices, but the portfolio, which encourages corporate social responsibility, seems to be weak. The market is already in the transition to a socially responsible investment model, but the market lacks additional incentives for socially responsible investment to be fully prepared for corporate social responsibility.