The article provides an in-depth analysis of the impact of Environmental, Social, and Governance (ESG) investing on the financial performance of Real Estate Investment Trusts (REITs).

ESG & REIT Performance: The study examines 234 ESG-rated REITs across five developed markets from 2003 to 2019, revealing that ESG factors are priced differently by investors, with environmental and social components being significant.

Trade-off & Social Impact: It supports the trade-off hypothesis, suggesting environmental practices may incur high costs impacting market returns. Conversely, a positive premium for social investing aligns with the social impact hypothesis, indicating responsible actions can lead to competitive advantages.

Post-GFC Insights: Post-Global Financial Crisis, the research finds a stronger positive relationship between social performance and financial returns, emphasizing the growing importance of social responsibility in investment decisions.

This paper underscores the nuanced relationship between ESG investing and REITs’ financial outcomes, highlighting the importance of strategic ESG integration in real estate portfolios.

Erol, Isil; Unal, Umut; Coskun, Yener (2021) : ESG investing and the
financial performance: A panel data analysis of developed REIT markets, MAGKS Joint
Discussion Paper Series in Economics, No. 23-2021, Philipps-University Marburg, School of
Business and Economics, Marburg