Going ESG: The Economic Value of Adopting an ESG Policy

Abstract

Does having an environmental, social, and governance (ESG) policy have an impact on stakeholders? This research presents a unique model that allows us to measure the economic value of adopting an ESG policy for financial institutions’ stakeholders. Using the results of a questionnaire distributed among financial institution employees and customers, we find that, on average, employees are willing to forgo 11% of their salary to work for a company that has adopted and implemented such a policy. In addition, customers are willing to pay 47% more in management fees to do business with financial institutions that have such a policy. To our knowledge, this is the first study that quantifies the benefits for financial institutions stakeholders of adopting an ESG policy.