• What exactly is ESG? If it can be quantified or measured, is it simply an amalgam of other established factors, like size and quality?
• The practitioner argument for causality is that a transparency bias towards large companies favours ESG because a common characteristic of highranking ESG companies is strong transparency and disclosure. The linkage between quality and ESG as factors stems from the intuition
that t`he governance of higher ESG-rated companies drives stronger
decision-making around capital allocation and shareholder returns.
If ESG does not represent a mix of existing factors like quality and value, then
how can academics and practitioners begin to define it in its own right - as an
uncorrelated factor?
