New research suggests that legally non-binding statements from corporate leaders help predict corporate behavior, at least on the margin. This includes the Business Roundtable Statement committing to ESG principles. But subsequent ESG-oriented actions can often be explained better by prudent risk management considerations than proffered ethical reasoning. Thus, commitments to ESG might be viewed as signaling a particular approach to risk management rather than an ideologically driven willingness to sacrifice profitability.
Tuesday, October 8, 2024