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• Teaching Plan | HBS Case Collection | May 2020

  SK Group: Social Progress Credits

  George Serafeim, Ethan Rouen and David Freiberg

  Teaching Plan for HBS Case 120-071.

  Citation:

  Serafeim, George, Ethan Rouen, and David Freiberg. "SK Group: Social Progress Credits." Harvard Business School Teaching Plan 120-112, May 2020.  View Details

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• Article | Financial Analysts Journal | 2020

  Public Sentiment and the Price of Corporate Sustainability

  George Serafeim

  Combining corporate sustainability performance scores based on environmental, social, and governance (ESG) data with big data measuring public sentiment about a company’s sustainability performance, I find that the valuation premium paid for companies with strong sustainability performance has increased over time and that the premium is increasing as a function of positive public sentiment momentum. An ESG factor going long on firms with superior or increasing sustainability performance and negative sentiment momentum and short on firms with inferior or decreasing sustainability performance and positive sentiment momentum delivers significant positive alpha. This low sentiment ESG factor is uncorrelated with other factors, such as value, momentum, size, profitability, and investment. In contrast, the high sentiment ESG factor delivers insignificant alpha and is strongly negatively correlated with the value factor. The evidence suggests that public sentiment influences investor views about the value of corporate sustainability activities and thereby both the price paid for corporate sustainability and the investment returns of portfolios that consider ESG data.

  Keywords: sustainability; ESG; ESG (environmental, social, governance) performance; investment management; investment strategy; big data; Machine learning; environment; Environmental Sustainability; Corporate Governance; Performance; Asset Pricing; Investment; Management; Strategy; Human Capital; Public Opinion; Value;

  Citation:

  Serafeim, George. "Public Sentiment and the Price of Corporate Sustainability." Financial Analysts Journal 76, no. 2 (2020): 26–46.  View Details

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• Article | AEA Papers and Proceedings | May 2020

  Tackling Climate Change Requires Organizational Purpose

  Rebecca Henderson and George Serafeim

  Unchecked climate change presents a profound threat to economic growth and political stability but despite widespread public concern about the issue, global emissions of greenhouse gases (GHGs) have not declined. Indeed current “business as usual” predictions imply that average global temperatures will rise by more than 4⁰C by 2100, with potentially catastrophic results. In this paper, we argue that while putting in place an effective regime for pricing GHG emissions is more essential than ever, it is unlikely to be sufficient. It is in this context that we hypothesize that increasing the fraction of commercial firms who are “authentically purpose-driven” might have a very significant effect on the problem of climate change.

  Keywords: corporate purpose; purpose; sustainability; environment; Climate Change; Organizations; Mission and Purpose; Environmental Sustainability; Strategy; Leadership;

  Citation:

  Henderson, Rebecca, and George Serafeim. "Tackling Climate Change Requires Organizational Purpose." AEA Papers and Proceedings 110 (May 2020): 177–180.  View Details

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