ESG Aversion: Experimental Evidence on Perceptions and Preferences / Ye Zhang, Eric Zou.

Format:

Book

Author/Creator:

Zhang, Ye.

Contributor:

Zou, Eric.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w34048.

NBER working paper series no. w34048

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2025.

Summary:

We develop an experimental framework to separate belief- from taste-based demand for Environmental, Social, and Governance (ESG) partnerships. In two symmetric experiments with real startup founders and VC investors, we found evidence of significant ESG penalty: profiles randomly labeled as ESG received less interest from both sides, driven by beliefs that ESG partners are less profitable and accessible. A willingness-to-pay task then revealed a latent taste for ESG: participants sacrificed lottery payoffs to receive additional match recommendations of ESG-oriented partners when profitability was held fixed. Overall, the evidence shows a market tension: performance concerns obscure an underlying taste for ESG.

Notes:

July 2025.

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