In a paper commissioned by the NYU Stern School of Business, Distinct Impact of Environmental and Governance News on Food Stocks, the authors, which includes Mayer Brown’s Carlos Juarez, examine the impact of events and news related to a company’s connection to climate change, and the impact on financial returns in order to determine the costs of investing in these assets. The paper suggests that investors seem to be less concerned with sustainability related to the larger companies, over $20 billion in market capitalization, than they are with their relatively smaller competitors. Consequently, investors seem to punish smaller firms for negative news more than they reward such firms for positive news.
The authors’ research also indicates that investors in general do identify and separate environment-related positive news from negative news and seem to give a similar push in those respective directions however marginal. Finally, the study also provides evidence that environmentally positive resolution to food companies’ issues seems to be perceived better than negative news. This indicates a consciousness in the overall market regarding the ESG factor, especially for palm-oil-related news.