Responsible Investment: Impact of ESG Rating on Firms' Profitability and Expected Return on the Stock Market
The purpose of the article is to disclose the phenomenon of responsible investment. The motives of firms to achieve ESG-goals (goals in the field of ecology, social sphere and corporate governance) are revealed. It has been found that ESG-goals do not always conflict with the desire to maximize profits. Firms with high ESG-rating tend to be more profitable. The channels of influence of ESG-rating on risk and profitability in the stock market are revealed. The motives prompting investors to highlight the ESG rating as a factor that determines investment decisions can be different: environmental protection; striving for increased profitability (responsible investments are often more profitable than classic ones); hedging against a certain type of risk. Assessment of responsible investments in the Russian stock market showed that responsible investments are more risky than classical ones, although the latter are less effective, since they lose in return per unit of risk.