Handbook of ESG Investing

Editors

Hans Lööf (Editor); Maziar Sahamkhadam (Editor); Andreas Stephan (Editor)

ISBN: 9781035322770

Published: September 2026

Format: Hardcover

Language: English

Publisher: Edward Elgar Publishing

Description

Environmental, social, and governance criteria have moved from a niche consideration to a central pillar of institutional asset allocation, yet measurement, data quality, and methodological consistency remain unresolved challenges for practitioners, regulators, and academic researchers alike. This handbook brings together international specialists in finance and economics to examine how ESG factors are reshaping long-term investment strategy, risk management, and corporate accountability across public and private markets.

Organized in three parts, the volume moves from the theoretical foundations of ESG contracting, portfolio optimization, and ratings methodology, through empirical measurement of ESG performance in equities, green bonds, and exchange-traded funds, to the practice of ESG investing in developed and emerging markets, including the application of artificial intelligence and machine learning to sustainability data and the cognitive biases that shape investor decision-making.

The contributors critically assess the limitations of current ESG rating systems and data infrastructure, while offering evidence-based frameworks that institutional investors, fund managers, and policymakers can apply directly to portfolio construction and disclosure practice.

Key Features

• A global, cross-market perspective on ESG investing drawn from contributors across Europe, Asia, and the Americas
• Practical frameworks for incorporating ESG ratings and scores into portfolio optimization and risk models
• Dedicated analysis of AI and machine learning applications for measuring ESG performance and sustainability reporting
• Evidence-based evaluation of green bonds and ESG-leader strategies within multi-asset portfolios
• Critical examination of cognitive biases and behavioral factors affecting ESG investment decisions

Coverage

The handbook covers ESG ratings and information content; ESG contracting and managerial incentives; green versus conventional fund performance; ESG-valued option pricing; portfolio theory under ESG constraints; global ESG valuation in equity markets; ESG impact in public and private equity; green bonds and multi-asset portfolios; ESG-linked ETF returns; sustainability reporting in global value chains; AI and big data applications for ESG measurement; and cognitive biases in ESG decision-making.

About the Editors

Hans Lööf, Maziar Sahamkhadam, and Andreas Stephan are the editors of this handbook, bringing together contributions from finance and economics researchers at universities and research institutions across Europe, Asia, and the Americas, with expertise spanning portfolio theory, sustainable finance, and empirical asset pricing.

Table of Contents

Chapter 1: An overview of ESG investing (Lööf, Sahamkhadam, Stephan) — Chapter 2: ESG: from process to product (Serafeim) — Part I: Theories & Methodology — Chapter 3: Information content of ESG ratings (Chini, Kräussl, Stefanova) — Chapter 4: ESG contracting and managerial incentives (Crifo, Guidoux) — Chapter 5: Comparing green and conventional funds (Lavenius, Sanctuary) — Chapter 6: Path-dependent ESG-valued option pricing (Divelgama et al.) — Chapter 7: Socially responsible criteria in portfolio theory (Shushi) — Chapter 8: ESG optimal portfolios under ratings ambiguity (Lauria et al.) — Part II: Measuring ESG Performance & Impact — Chapter 9: Global ESG valuation in stock markets (Junttila, Lehkonen, Vu) — Chapter 10: ESG investor impact in public and private equities (Gruener, Wieckert) — Chapter 11: Green bonds and ESG leaders in multi-asset portfolios (Sahamkhadam, Stephan) — Chapter 12: ESG characteristics and ETF returns (Filippou, Hu, Wu) — Chapter 13: Wavelet analysis and ESG financial performance (Kiermeier) — Chapter 14: Science-based target initiative and returns (Dahlström et al.) — Part III: Practice of ESG Investing — Chapter 15: ESG practices in developed and emerging markets (Martins) — Chapter 16: Sustainability reporting in global value chains (Rao et al.) — Chapter 17: Big data, AI, and machine learning for ESG (Öhman, Rana) — Chapter 18: Exit vs voice and scalability (Alessi et al.) — Chapter 19: Measuring inequality in sustainability (Amendola et al.) — Chapter 20: Cognitive biases in ESG investing (Chudy, Barton)

Why buy this book?

ESG investing has become a permanent feature of institutional finance, but the literature is fragmented between practitioner guides and narrow academic studies. This handbook is one of the few references that bridges theory, measurement, and practice in a single volume, with genuinely international contributions rather than a single-market focus. For an academic or institutional library building a sustainable finance collection, it offers breadth across methodology, empirical evidence, and emerging technology applications that few competing titles combine.

Keywords

ESG investing, sustainable finance, environmental social governance, impact investing, green bonds, sustainability reporting, responsible investment, ESG ratings, portfolio management, climate finance, behavioral finance

Target Audience

Investment professionals and portfolio managers, academic libraries in finance and economics, policymakers and regulators in sustainable finance, finance and economics graduate programs, ESG analysts and consultants

Genre

ESG Investing, Sustainable Finance, Investment Management, Corporate Governance, Behavioral Finance

Q&A

What does the Handbook of ESG Investing cover?
It covers the theory, measurement, and practice of ESG investing, including ratings methodology, portfolio optimization, green bonds, AI applications for sustainability data, and behavioral biases in ESG decision-making, across developed and emerging markets.

How is ESG performance measured in institutional portfolios?
The handbook presents multiple empirical approaches, including ESG rating comparisons, wavelet analysis of financial performance, ETF return decomposition, and impact measurement across public and private equity.

What role does artificial intelligence play in ESG investing?
Several chapters examine how big data, AI, and machine learning are being applied to ESG measurement, sustainability reporting in global value chains, and improving the consistency of ESG scores.

Who should read the Handbook of ESG Investing?
Institutional investors, portfolio managers, finance and economics academics, regulators and policymakers working on sustainable finance disclosure, and graduate programs building ESG curricula.

What are the main challenges facing ESG data and ratings today?
The handbook identifies inconsistent methodology across rating providers, data gaps in emerging markets, and cognitive biases among investors as central obstacles to reliable, comparable ESG measurement.

Where can I buy Handbook of ESG Investing?
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