Will Good ESG Performance Lead To Better Returns

The term "double carbon" has appeared in our lives more than once,and it has become a global consensus to reduce carbon dioxide emissions in response to global climate change.On September 22,2020,President Xi Jinping announced at the general debate of the 75th United Nations General Assembly:"China will increase its nationally determined contribution,adopt more powerful policies and measures,and strive to achieve a peak in carbon dioxide emissions before 2030.,and achieve carbon neutrality by 2060."In the context of "dual carbon",ESG investment that can provide an effective starting point for this goal has become a hot spot in my country’s capital market.ESG includes three dimensions of environmental,social responsibility and corporate governance indicators,and is also the information that investors pay most attention to in addition to financial indicators of a company.In the past two years,the pace of opening up of the securities market has been accelerating.The launch of Shanghai-Shenzhen-Hong Kong Stock Connect has ushered in an era of two-way interconnection.Although the inclusion of A shares in the MSCI index cannot be compared with the importance of opening up at the policy level,its index is the most referenced by fund managers.One of the indexes of China,the inclusion of A shares in the composition is of great significance to the Chinese capital market.According to MSCI estimates,there are nearly 6,000 fund companies tracking the MSCI index worldwide,with a total capital of US$7 trillion,of which as many as 700 ETF products track the MSCI index.It can be said that the constituent stocks of the MSCI index represent the choice of foreign investors to a certain extent.Foreign investors have a longer historical accumulation and experience.For companies,the amount of funds brought by them in the context of market opening cannot be underestimated.Studying this issue will help improve the ESG system of my country’s capital market.Construction and development,and promote the enthusiasm of A-share listed companies to strengthen ESG information disclosure,fulfill social responsibilities,and practice low-carbon goals.Under such a dual background,this paper intends to take MSCI constituent stocks as the research object to explore whether the ESG performance of A-share listed companies is related to the choice of foreign institutions.sample,and use empirical analysis to explore whether good ESG performance means more attractive returns.Through empirical analysis,it is found that there is a significant positive correlation between ESG performance and excess return,which means that companies with good ESG performance not only attract more attention from investors,but also bring excess returns to investors.Therefore,according to the recommendations in the research results,the construction of my country’s ESG system should be promoted from top to bottom.As an important participant in the system,regulators,listed companies and investment institutions should start from their own and attach importance to ESG concepts to jointly promote their development.However,at the investor level,what kind of excess returns ESG can bring to investors is not covered in this article,and it is worth continuing to study in depth.