0912

no-arbitrage · Oct 30, 2024 · e91436e · e91436e
1 parent ea5e3b7
commit e91436e
Show file tree

Hide file tree

Showing 17 changed files with 49 additions and 95 deletions.
diff --git a/_posts/2015-01-01-welcome-to-jekyll.md → _drafts/2015-01-01-welcome-to-jekyll.md b/_posts/2015-01-01-welcome-to-jekyll.md → _drafts/2015-01-01-welcome-to-jekyll.md
diff --git a/_posts/2015-02-28-test-markdown.md → _drafts/2015-02-28-test-markdown.md b/_posts/2015-02-28-test-markdown.md → _drafts/2015-02-28-test-markdown.md
diff --git a/_posts/2016-01-01-another-test-markdown.md → _drafts/2016-01-01-another-test-markdown.md b/_posts/2016-01-01-another-test-markdown.md → _drafts/2016-01-01-another-test-markdown.md
diff --git a/_posts/2016-05-19-super-short-article.md → _drafts/2016-05-19-super-short-article.md b/_posts/2016-05-19-super-short-article.md → _drafts/2016-05-19-super-short-article.md
diff --git a/_posts/2016-05-20-super-long-article.md → _drafts/2016-05-20-super-long-article.md b/_posts/2016-05-20-super-long-article.md → _drafts/2016-05-20-super-long-article.md
diff --git a/_posts/2016-08-12-my-example-post.md → _drafts/2016-08-12-my-example-post.md b/_posts/2016-08-12-my-example-post.md → _drafts/2016-08-12-my-example-post.md
diff --git a/...-post-demonstrates-post-content-styles.md → ...-post-demonstrates-post-content-styles.md b/...-post-demonstrates-post-content-styles.md → ...-post-demonstrates-post-content-styles.md
diff --git a/_posts/2017-06-10-quick-mardown-example.md → _drafts/2017-06-10-quick-mardown-example.md b/_posts/2017-06-10-quick-mardown-example.md → _drafts/2017-06-10-quick-mardown-example.md
diff --git a/_posts/2017-12-04-plantuml-example.md → _drafts/2017-12-04-plantuml-example.md b/_posts/2017-12-04-plantuml-example.md → _drafts/2017-12-04-plantuml-example.md
diff --git a/_posts/2017-12-08-mermaid-example.md → _drafts/2017-12-08-mermaid-example.md b/_posts/2017-12-08-mermaid-example.md → _drafts/2017-12-08-mermaid-example.md
diff --git a/_posts/2017-12-15-table-example.md → _drafts/2017-12-15-table-example.md b/_posts/2017-12-15-table-example.md → _drafts/2017-12-15-table-example.md
diff --git a/_posts/2017-12-18-video-example.md → _drafts/2017-12-18-video-example.md b/_posts/2017-12-18-video-example.md → _drafts/2017-12-18-video-example.md
diff --git a/_posts/2018-05-26-mathjax-test.md → _drafts/2018-05-26-mathjax-test.md b/_posts/2018-05-26-mathjax-test.md → _drafts/2018-05-26-mathjax-test.md
diff --git a/_posts/2018-12-05-an-exhibit-of-markdown.md → _drafts/2018-12-05-an-exhibit-of-markdown.md b/_posts/2018-12-05-an-exhibit-of-markdown.md → _drafts/2018-12-05-an-exhibit-of-markdown.md
diff --git a/_posts/2018-12-05-copy.md b/_posts/2018-12-05-copy.md
diff --git a/_posts/2024-10-29-You-don-t-have-a-esg-strategy.md b/_posts/2024-10-29-You-don-t-have-a-esg-strategy.md
@@ -7,7 +7,7 @@ excerpt_image: https://github.com/jeffreytse/jekyll-theme-yat/assets/9413601/2ed
 tags: [ESG]
 ---
 
-
+## Strategy is not Planning
 Many consultants offer ESG planning but often label it as an ESG strategy. It’s crucial to understand the difference.
 
 In the strategy world, the distinction between strategy and planning is well-defined. **Strategy is not planning.** Strategy is about making hard choices; planning is about organizing actions. ESG’s popularity may partly stem from its planning nature, which promises a single direction—becoming more ethical, responsible, and sustainable. This approach reassures executives in the boardroom. It’s straightforward, and people tend to favor straightforward solutions. Strategy, however, demands a set of coherent, risky choices that allow a business to differentiate itself from competitors, often by deciding *not* to compete on certain fronts. This is challenging.
@@ -21,3 +21,9 @@ to:
 > “Which ESG factors matter most to our specific business context? How can we leverage our unique resources and strengths to create meaningful, sustainable impacts for our stakeholders?”
 
 By targeting the ESG factors that align with the company’s strengths and position, executives not only build a positive impact that may be harder for competitors to replicate, but they also enhance their strategic position. This approach offers a genuine source of competitive advantage, setting the business apart.
+
+## ESG Marketing isn't a Long-term Solution to Corproate Social Responsibility.
+
+While ESG marketing can temporarily bolster a company’s reputation, it lacks the depth and long-term impact of authentic CSR practices and can backfire if the company fails to deliver on its promises.
+
+## Embracing accountability
diff --git a/_posts/2024-10-30-Causation-between-ESG-and-Profitability..md b/_posts/2024-10-30-Causation-between-ESG-and-Profitability..md
@@ -0,0 +1,42 @@
+---
+layout: post
+title: Causation between ESG and Profitability.
+subtitle: Focus on causation might limit the perspective needed to see the bigger picture.
+categories: ESG
+tags: [Idea, Comment]
+---
+
+# The Causation Effect between ESG and Profitability
+## One-Step Causation and Self-Reinforcing Cycles
+
+In Damodaran's post and video session about ESG, he often highlights the causation between being "good" (practicing strong ESG principles) and being "profitable." It is true that many articles claim companies with good ESG practices are more likely to achieve superior profitability. However, the causation direction may be different. It could be that companies with higher profitability simply have more resources to brush up their ESG marketing and practices.
+
+This perspective raises the classic statistical pitfall of **reverse causation** or **endogeneity**, where it's unclear if ESG practices lead to profitability or if profitability enables stronger ESG initiatives. However, if we focus solely on causation direction, we risk missing the broader point.
+
+### Mutually Reinforcing Cycles
+There is a type of relationship like this often described as **mutually reinforcing** or **self-reinforcing cycles**. In this dynamic, two factors drive each other in a continuous loop, making it difficult (or irrelevant) to determine which is the true origin. Instead of focusing on the "first cause," the key is to engage with the cycle to achieve a desired outcome.
+
+For example:
+- **Companies with strong ESG practices** may experience enhanced reputations, customer loyalty, and operational efficiencies that improve profitability.
+- **Increased profitability**, in turn, provides companies with more resources to further invest in or promote their ESG practices.
+
+This cycle creates a feedback loop where both ESG and profitability can grow together, and the origin point becomes less relevant than engaging with the cycle to produce desired results.
+
+### Statistical Testing for Self-Reinforcing Cycles
+To analyze this type of relationship, several statistical tests and models are well-suited for examining the reciprocal or cyclical influence of ESG and profitability:
+
+1. **Cross-Lagged Panel Analysis**  
+   This test uses time-lagged data to analyze if each variable predicts changes in the other over time.
+
+2. **Vector Autoregression (VAR)**  
+   A dynamic model that allows each variable to be expressed as a function of its own past values and the past values of the other variable, revealing potential reinforcement.
+
+3. **Structural Equation Modeling (SEM)**  
+   SEM can help model the complex, bi-directional relationship between ESG and profitability, including indirect effects and latent variables that might influence both.
+
+4. **Granger Causality Test**  
+   Running this test in both directions (e.g., from ESG to profitability and vice versa) can provide preliminary insights into whether changes in one precede the other, even if it does not confirm true causation.
+
+### Big Picture Takeaway
+Instead of identifying a single cause, the goal is to understand and leverage the ESG-profitability cycle to support a company’s long-term objectives. This perspective encourages a pragmatic approach where the focus shifts to participating in and amplifying the cycle rather than proving which factor is primary. This way, companies can create a sustainable impact that aligns ESG goals with financial performance.
+