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The topic of corporate sustainability has been intensely discussed for decades. Since Friedman’s doctrine in the 1970’s, the view of corporations’ responsibility to engage in activities for other motives than shareholder value maximization has been an area of intense debate. Wealth maximization, in this regard, is often regarded as an opposing goal in relation to environmental, social and governance (ESG) matters. This discrepancy begs the question of how the general public interprets ESG initiatives and if there is support for the claim that stakeholder engagement and corporate legitimacy activities works in favor of the owners rather than against them.

Stock indexes are used to highlight certain companies performing well within a certain market, economy, or sector. Corporations displaying high ESG-performance can thus be listed on specific ESG indexes, displaying their ESG-related excellence to the greater public. But how do the financial markets react to the listing? This study aims to answer this question, exploring whether the actual listing has a positive effect on stock performance. 

This quantitative and explanatory study mainly revolves around the OMX 30 ESG RESPONSIBLE INDEX (OMXS30ESG). 29 companies were listed on the OMXS30ESG on its commencement in 2018. Being a sub-index to the OMXS30, the OMXS30ESG is regarded as the most prominent ESG index in Sweden. The study delves into the financial markets’ perception of the explored companies’ listings and whether the stock performance was subsequently affected. Further, a brief look into delistings is performed, exploring whether opposite effects are found.

The authors hypothesized a positive relationship between ESG index listings and subsequent stock performance, defined as higher yields and trading volume as well as lower volatility. If such a relation was found, investors and corporate managers could rely on this study for capital allocation and investment decision purposes. However, contrary to expectations, the study did not find enough evidence to support a claim of increased stock performance subsequent to a listing on an ESG index.

This is the first study of its kind in a Swedish context. The use of only one index, with the majority of the explored listings occurring at the same time, provided limitations to the possibilities of achieving significant results, which suggests there is a need for further research of the area.