Engaging in corporate social responsibility (CSR) is, of course, a good thing for a company to do. It’s also an image-friendly thing to do. But could it be a financially advantageous thing to do as well? Yes, as it turns out: Investors use reported data on environmental, social, and governance (ESG) practices to help make decisions on which companies to fund.

Those data have become increasingly abundant—a fact that may influence investors’ growing interest in CSR. In the mid-1990s, only...

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