Altruism or Self-Interest? ESG and Participation in Employee Share Plans

We ask how the ESG performance of firms affects the asset allocation of a large sample of French employees between their employer’s stock and alternative investments in firm sponsored savings plans. After ESG incidents, employees are less likely to invest and they invest smaller amounts in their company’s stock.  

Incidents in the “Social” category, especially those related to working conditions and local incidents, are the ones that affect these investment decisions the most. Pecuniary motives are unlikely to explain this finding. Overall, our results suggest that ESG policies directly impacting the well-being of employees affect employee satisfaction and loyalty the most.

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