The impact of esg factors on long-term portfolio performance: a meta-analysis

Abstract

Environmental, social, and governance (ESG) factors have gained significant traction in recent years, driven by growing investor interest in sustainable and responsible investing. This meta-analysis investigates the relationship between ESG integration and long-term portfolio performance, analyzing over 150 studies published between 2015 and 2023. We employ a comprehensive meta-analytic framework to assess the overall effect size, heterogeneity across studies, and the influence of moderating variables. The findings reveal a positive and statistically significant association between ESG integration and long-term risk-adjusted portfolio returns, suggesting that incorporating ESG considerations can enhance financial performance over extended horizons. Furthermore, the analysis identifies specific ESG dimensions, such as environmental innovation and strong governance practices, as key drivers of this relationship. Additionally, the moderating effect of factors like investment horizon, portfolio construction method, and regional focus is explored, providing valuable insights into the contextual nuances of the ESG-performance link.