Stakeholder Misperceptions of ESG Investment Impacts on Business Financial and Organizational Performance Indicators

Abstract

In this study, we contrast Environmental, Social and Governance (ESG) investment impacts on businesses' performance indicators with key market-makers' perceptions of these impacts. We hypothesized that stakeholders would cluster around certain “frames” reflecting their ex-ante group views of market conditions. To explore this hypothesis, we first assessed the interrelation between organizational and financial performance indicators with ESG scores through a factorial analysis using S&P500 company data for the 2015–2023 period to define market reality. We, then, analyzed ESG stakeholder perceptions by conducting a Q-method survey of 34 market-maker viewpoints. Six intersubjective factors, or shared “frames,” emerged amongst stakeholders: “Idealist interventionists,” “Realists,” “Skeptics,” “Skeptic non-interventionists,” “Skeptic interventionists” and “Idealist non-interventionists.” In light of these findings, we discuss how stakeholder misperceptions of ESG market dynamics may be reflecting directionally-motivated reasoning, in all likelihood derived from differentiated utility-driven incentives. These ex-post frames differed from our expected hypotheses of ex-ante stakeholder viewpoints.