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The long-term competitive benefits of being ESG friendly

Writer's picture: פרופ' ניראון חשאי ופרופ' דרור עציוןפרופ' ניראון חשאי ופרופ' דרור עציון

This position paper examines the origins of sustainable competitive advantage, evaluating the theoretical relationship between companies accounting for ESG considerations to their long- term competitive advantage.


In this paper, we make the claim that ESG considerations must be assessed through cost-benefit analyses, as opposed to the approach arguing the more ESG considerations are taken into account then necessarily the companies performance must improve.


Only if ESG considerations are deemed to improve the cost-benefit relationship, will it contribute to the company's long-term competitive advantage. By extension, the inverse also holds true, if the ESG considerations prove costlier than the benefits they provide then no competitive advantage is secured.


Consequently, ESG considerations must be evaluated differently across different industries and companies and in careful synchronization with the company's unique strategic and competitive objectives.


In the long term, it is to be expected that shareholders will positively appreciate companies that effectively integrate ESG considerations into their corporate decision-making, bolstering further the value of ESG considerations.


To read the full post, visit our Hebrew main blog

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