Settling the Debate on Whether Green Investing Pays. It is slightly negative. No greenium for ESG!

Yale University admits it! Common sense and reality are hard to beat!

And this despite massive government promotion and subsidies!

What are "brown assets" anyway??? This study smells like junk/pseudo science.

"... In a new study ... replicated several papers from the green finance literature based on different measures of an asset’s “greenness,” testing their methodology with realized stock returns—that is, the actual profit or loss from stock sales—in multiple markets around the world. But they found that the results were sensitive to the specific measure of greenness and varied substantially from market to market. So the researchers instead proposed their own methodology for constructing a more comprehensive—and useful—green score, and moved from using backward-looking realized returns to forward-looking expected returns. 

The researchers found that their own green score, which they constructed by averaging key greenness measures from leading data providers, revealed a small cost of investing in climate-friendly stocks, meaning that investors is expected to get 0.50% less in returns each year when investing greenest tercile of stocks relative to the brownest. Corporate bonds and sovereign bonds displayed similar patterns as their greenness increased. ‌..."

From the abstract:

"The greenium (the expected return of green securities relative to brown) is a central impact measure for ESG investors. Replicating the literature’s wide range of equity greenium estimates based on realized returns, we find that these are not robust to changing the greenness measure or time period. Instead, we propose a robust green score combined with forward-looking expected returns, yielding a more precisely estimated annual equity greenium of -25 basis points per standard deviation increase in greenness. The greenium is more negative in greener countries and over time. Finally, we provide greeniums for corporate bonds, weighted-average costs of capital, and sovereign bonds."

Settling the Debate on Whether Green Investing Pays ‌‌ | Yale Insights "Does climate-friendly investing earn a higher return? In a new study, Yale SOM’s Theis Jensen and his co-authors find that the “greenium”—the return from green investments relative to brown ones—is slightly negative. He says that’s actually good news for the planet."

In Search of the True Greenium (open access)