Data Update 1 for 2025: The Draw (and Danger) of Data

For the last four decades, I have spent the first week of each year collecting and analyzing data on publicly traded companies and sharing what I find with anyone who is interested. It is the end of the first full week in 2025, and my data update for the year is now up and running, and I plan to use this post to describe my data sample, my processes for computing industry statistics and the links to finding them. I will also repeat the caveats about how and where the data is best used, that I have always added to my updates.

The Draw (and Dangers) of Data

   It is the age of data, as both companies and investors claim to have tamed it to serve their commercial  interests. While I believe that data can lead to better decisions, I am wary about the claims made about what it can and cannot do in terms of optimizing decision making. I find its greatest use is on two dimensions:

1. Fact-checking assertions: It has always been true that human beings assert beliefs as facts, but with social media at play, they can now make these assertion to much bigger audiences. In corporate finance and investing, which are areas that I work in, I find myself doing double takes as I listen to politicians, market experts and economists making statements about company and market behavior that are fairy tales, and data is often my weapon for discerning the truth. 
2. Noise in predictions: One reason that the expert class is increasingly mistrusted is because of the unwillingness on the part of many in this class to admit to uncertainty in their forecasts for the future. Hiding behind their academic or professional credentials, they ask people to trust them to be right, but that trust has eroded. If these predictions are based upon data, as they claim they are, it is almost always the case that they come with error (noise) and that admitting to this is not a sign of weakness. In some cases, it is true that the size of that errors may be so large that those listening to the predictions may not act on them, but that is a healthy response.

As I listen to many fall under the spell of data, with AI and analytics add to its allure, I am uncomfortable with the notion that data has all of the answers, and there two reasons why:

1. Data can be biased: There is a widely held belief that data is objective, at least if it takes numerical form. In the hands of analysts who are biased or have agendas, data can be molded to fit pre-conceptions. I would like to claim to have no bias, but that would be a lie, since biases are often engrained and unconscious, but I have tried, as best as I can, to be transparent about the sample that I use, the data that I work with and how I compute my statistics. In some cases, that may frustrate you, if you are looking for precision, since I offer a range of values, based upon different sampling and estimation choices.  Taking a look at my tax rate calculations, by industry, for US companies, int the start of 2025, I report the following tax rates across companies.

   

   Effective tax rates, by Industry (US)

   Note, that the tax rates for US companies range from 6.75% to 26.43%, depending on how I compute the rate, and which companies I use to arrive at that estimate. If you start with the pre-conception that US companies do not pay their fair share in taxes, you will latch on to the 6.75% as your estimated tax rate, whereas if you are in the camp that believes that US companies pay their fair share (or more), you may find 26.43% to be your preferred estimate. 
2. Past versus Future: Investors and companies often base their future predictions on the past, and while that is entirely understandable, there is a reason why every investment pitch comes with the disclaimer that “past performance is not a reliable indicator of future performance”. I have written about how mean reversion is at the heart of many active investing strategies, and why assuming that history will repeat can be a mistake. Thus, as you peruse my historical data on implied equity risk premiums or PE ratios for the S&P 500 over time, you may be tempted to compute averages and use them in your investment strategies, or use my industry averages for debt ratios and pricing multiples as the target for every company in the peer group, but you should hold back. 

The Sample

    It is undeniable that data is more accessible and available than ever before, and I am a beneficiary. I draw my data from many raw data sources, some of which are freely available to everyone, some of which I pay for and some of which I have access to, because I work at a business school in a university. For company data, my primary source is S&P Capital IQ, augmented with data from a Bloomberg terminal. For the segment of my data that is macroeconomic, my primary source is FRED, the data set maintained by the Federal Reserve Bank, but I supplement with other data that I found online, including NAIC for bond spread data and Political Risk Services (PRS) for country risk scores. 

    My dataset includes all publicly traded companies listed at the start of the year, with a market price available, and there were 47810 firms in my sample, roughly in line with the sample sizes in the last few years. Not surprisingly, the company listings are across the world, and I look at the breakdown of companies, by number and market cap, by geography:

As you can see, the market cap of US companies at the start of 2025 accounted for roughly 49% of the market cap of global stocks, up from 44% at the start of 2024 and 42% at the start of 2023. In the table below, we compare the changes in regional market capitalizations (in $ millions) over time.

Breaking down companies by (S&P) sector,  again both in numbers and market cap, here is what I get:

While industrials the most listed stocks, technology accounts for 21% of the market cap of all listed stocks, globally, making it the most valuable sector. Thee are wide differences across regions, though, in sector breakdown:

Much of the increase in market capitalization for US equities has come from a surging technology sector, and it is striking that Europe has the lowest percent of value from tech companies of any of the broad subgroups in this table.

    I also create a more detailed breakdown of companies into 94 industry groups, loosely structured to stay with industry groupings that I originally created in the 1990s from Value Line data, to allow for comparisons across time. I know that this classification is at odds with the industry classifications based upon SIC or NAICS codes, but it works well enough for me, at least in the context of corporate finance and valuation. For some of you, my industry classifications may be overly broad, but if you want to use a more focused peer group, I am afraid that you will have to look elsewhere. The industry averages that I report are also provided using the regional breakdown above. If you want to check out which industry group a company falls into, please click on this file (a very large one that may take a while to download) for that detail.

The Variables

    The variables that I report industry-average statistics for reflect my interests, and they range the spectrum, with risk, profitability, leverage, and dividend metrics thrown into the mix. Since I teach corporate finance and valuation, I find it useful to break down the data that I report based upon these groupings. The corporate finance grouping includes variables that help in the decisions that businesses need to make on investing, financing and dividends (with links to the US data for 2025, but you can find more extensive data links here.)

		Corporate Governance & Descriptive
		1. Insider, CEO & Institutional holdings
		2. Aggregate operating numbers
		3. Employee Count & Compensation
Investing Principle		Financing Principle		Dividend Principle
Hurdle Rate	Project Returns	Financing Mix	Financing Type	Cash Return	Dividends/Buybacks
1. Beta & Risk	1. Return on Equity	1. Debt Ratios & Fundamentals	1. Debt Details	1. Dividends and Potential Dividends (FCFE)	1.Buybacks
2. Equity Risk Premiums	2. Return on (invested) capital	2. Ratings & Spreads	2. Lease Effect	2. Dividend yield & payout
3. Default Spreads	3. Margins & ROC	3. Tax rates
4. Costs of equity & capital	4. Excess Returns on investments	4. Financing Flows
	5. Market alpha

(If you have trouble with the links, please try a different browser)

Many of these corporate finance variables, such as the costs of equity and capital, debt ratios and accounting returns also find their way into my valuations, but I add a few variables that are more attuned to my valuation and pricing data needs as well.

	Valuation		Pricing
Growth & Reinvestment	Profitability	Risk	Multiples
1. Historical Growth in Revenues & Earnings	1. Profit Margins	1. Costs of equity & capital	1. Earnings Multiples
2. Fundamental Growth in Equity Earnings	2. Return on Equity	2. Standard Deviation in Equity/Firm Value	2. Book Value Multiples
3. Fundamenal Growth in Operating Earnings			3. Revenue Multiples
4. Long term Reinvestment (Cap Ex & Acquisitons)			4. EBIT & EBITDA multiples
5. R&D
6. Working capital needs

(If you have trouble with the links, please try a different browser)

Not that while much of this data comes from drawn from financial statements, some of it is market-price driven (betas, standard deviations, trading data), some relates to asset classes (returns on stocks, bonds, real estate) and some are macroeconomic (interest rates, inflation and risk premiums).  While some of the variables are obvious, others are subject to interpretation, and I have a glossary, where you can see the definitions that I use for the accounting variables. In addition, within each of the datasets (in excel format), you will find a page defining the variables used in that dataset. 

The Timing

    These datasets were all compiled in the last four days and reflect data available at the start of 2025. For market numbers, like market capitalization, interest rates and risk premiums, these numbers are current, reflecting the market's judgments at the start of 2025. For company financial numbers, I am reliant on accounting information, which gets updated on a quarterly basis. As a consequence, the accounting numbers reflect the most recent financial filings (usually September 30, 2024), and I use the trailing 12-month numbers through the most recent filing for flow numbers (income statement and cash flow statements) and the most recent balance sheet for stock numbers (balance sheet values). 

    While this practice may seem inconsistent, it reflects what investors in the market have available to them, to price stocks. After all, no investor has access to calendar year 2024 accounting numbers at the start of 2025, and it seems entirely consistent to me that the trailing PE ratio at the start of 2025 be computed using the price at the start of 2025 divided by the trailing income in the twelve months ending in September 2024. In the same vein, the expected growth rates for the future and earnings in forward years are obtained by looking at the most updated forecasts from analysts at the start of 2025. 

    Since I update the data only once a year, it will age as we go through 2025, but that aging will be most felt, if you use my pricing multiples (PE, PBV, EV to EBITDA etc.) and not so much with the accounting ratios (accounting returns). To the extent that interest rates and risk premiums will change over the course of the year, the data sets that use them (cost of capital, excess returns) allow for updating these macro numbers. In short, if the ten-year treasury rate climbs to 5% and equity risk premiums surge, you can update those numbers in the cost of capital worksheet, and get updated values.

The Estimation Process

    While I compute the data variables by company, I am restricted from sharing company-specific data by my raw data providers, and most of the data I report is at the industry level. That said, I have wrestled with how best to estimate and report industry statistics, since almost every statistical measure comes with caveats. For a metric like price earnings ratios, computing an average across companies will result in sampling bias (from eliminating money-losing firms) and be skewed by outliers in one direction (mostly positive, since PE ratios cannot be negative). Since this problem occurs across almost all the variables, I use an aggregated variant, where with PE, for instance, I aggregate the market capitalization of all the companies (including money losing firms) in an industry grouping and divide by the aggregated net income of all the companies, including money losers. 

    Since I include all publicly traded firms in my sample, with disclosure requirements varying across firms, there are variables where the data is missing or not disclosed. Rather than throw out these firms from the sample entirely, I keep them in my universe, but report values for only the firms with non-missing data. One example is my data on employees, a dataset that I added two years ago, where I report statistics like revenue per employee and compensation statistics. Since this is not a data item that is disclosed voluntarily only by some firms, the statistics are less reliable than on where there is universal disclosure. 

    On an upbeat note,  and speaking from the perspective of someone who has been doing this for a few decades, accounting standards around the world are less divergent now than in the past, and the data, even in small emerging markets, has far fewer missing items than ten or twenty years ago. 

Accessing and Using the Data

    The data that you will find on my website is for public consumption, and I have tried to organize it to make it easily accessible on my webpage. Note that the current year’s data can be accessed here:

https://pages.stern.nyu.edu/~adamodar//New_Home_Page/datacurrent.html

If you click on a link and it does not work, please try a different browser, since Google Chrome, in particular, has had issues with downloads on my server.

    If you are interested in getting the data from previous years, it should be available in the archived data section on my webpage:

https://pages.stern.nyu.edu/~adamodar//New_Home_Page/dataarchived.html

This data goes back more than twenty years, for some data items and for US data, but only a decade or so for global markets.

       Finally, the data is intended primarily for practitioners in corporate finance and valuation, and I hope that I can save you some time and help in valuations in real time. It is worth emphasizing that every data item on my page comes from public sources, and that anyone with time and access to data can recreate it.  For a complete reading of data usage, try this link:

https://pages.stern.nyu.edu/~adamodar//New_Home_Page/datahistory.html

If you are in a regulatory or legal dispute, and you are using my data to make your case, you are welcome to do so, but please do not drag me into the fight.  As for acknowledgements when using the data, I will repeat that I said in prior years. If you use my data and want to acknowledge that usage, I thank you, but if you skip that acknowledgement, I will not view it as a slight, and I certainly am not going to threaten you with legal consequences.

    As a final note, please recognize that this I don't have a team working for me, and while that gives me the benefit of controlling the process, unlike the pope, I am extremely fallible. If you find mistakes or missing links, please let me know and I will fix them as quickly as I can. Finally, I have no desire to become a data service, and I cannot meet requests for customized data, no matter how reasonable they may be. I am sorry!

YouTube Video

Links

1. Current data (start of 2025)
2. Archived data (from prior years)
3. Companies/Industries
4. Data definitions

Data Updates for 2025

1. Data Update 1 for 2025: The Draw (and Danger) of Data!
2. Data Update 2 for 2025: The Resilience of US Equities

For the fun of it: An Open House for my Spring 2025 Classes

I am a teacher at heart, and every year, for more than two decades, I have invited people to join me in the classes that I teach at the Stern School of Business at New York University. Since I teach these classes only in the spring, and the first sessions for each of the classes will be in late January, I think this is a good time to provide some details on the classes, including content and structure. If you have read these missives in prior years, much of what I say will sound familiar, but I have added new content and updated the links you will need to partake in the classes. 

My Motives for Teaching

    I was in the second year of my MBA program at UCLA, when I had my moment on grace. I had taken a job as a teaching assistant, almost entirely because I needed the money to pay my tuition and living expenses, and in a subject (accounting) that did not excite me in the least. A few minutes after I walked in to teach my first class, I realized that I had found what I wanted to do for the rest of my life, and I have been a teacher ever since. Since that was 1983, this will be my forty first year teaching, and I have never once regretted my choice.

    I know that teaching is not a profession held in high esteem anymore, for good and bad reasons, and I will not try to defend it here. It is possible that some of the critics are right, and I teach because I cannot do, but I like to think that there is more to my career choice than ineptitude. My motivations for teaching are manifold, and let me list some of them:

1. I like the stage: I believe that every teacher, to some extent, has a little bit of a repressed actor in him or her, and I do enjoy being in front of an audience, with the added benefit that I get to review the audience, with the grades that I given them, rather than the other way around.
2. I like to make a difference: I do not expect my students to agree with all or even much of what I have to say, but I would like to think that I sometimes change the way they think about finance, and perhaps even affect their choice of professions. I am lucky enough to hear from students who were in my classes decades ago, and to find out that my teaching made a difference in their lives. 
3. I like not having a boss: I would be a terrible employee, since I am headstrong, opinionated and awfully lazy, especially when I must do things I don’t like to do. As a teacher, I am my own boss and find my foibles completely understandable and forgivable.

I know that teaching may not be your cup of tea, but I do hope that you enjoy whatever you do, as much as I do teaching, and I would like to think that some of that joy comes through.

My Teaching Process

    I do a session on how to teach for business school faculty, and I emphasize that there is no one template for a good teacher. I am an old-fashioned lecturer, a control freak when it comes to what happens in my classroom. In forty years of teaching, I have never once had a guest lecturer in my classroom or turned my class over to a free-for-all discussion.

1. Class narrative: This may be a quirk of mine, but I stay away from teaching classes that are collections of topics. In my view, having a unifying narrative not only makes a class more fun to teach, but also more memorable. As you look at my class list in the next section, you will note that each of the classes is built around a story line, with the sessions building up to what is hopefully a climax.
2. Bulking up the reasoning muscle: When asked a question in class, even if I know the answer, I try to not only reason my way to an answer, but to also be open about doubts that I may have about that answer. In keeping with the old saying that it is better to teach someone to fish, than to give them fish, I believe it is my job to equip my students with the capacity to come up with answers to questions that they may face in the future. In my post on the threat that AI poses to us, I argued that one advantage we have over AI is the capacity to reason, but that the ease of looking up answers online, i.e., the Google search curse, is eating away at that capacity.
3. Make it real: I know that, and especially so in business schools, students feel that what they are learning will not work in the real world. I like to think that my classes are firmly grounded in reality, with my examples being real companies in real time. I am aware of the risks that when you work with companies in real time, your mistakes will also play out in real time, but I am okay with being wrong. 
4. Straight answers: When I was a student, I remember being frustrated by teachers, who so thoroughly hedged themselves, with the one hand and the other hand playing out, that they left me unclear about what they were saying. I would like to think that I do not hold back, and that I stay true to the motto that I would rather be transparently wrong than opaquely right. It has sometimes got me some blowback, when I expressed my views about value investing being rigid, ritualistic and righteous and the absolute emptiness of virtue concepts like ESG and sustainability, but so be it.

I am aware of things that I need to work on. My ego sometimes still gets in the way of admitting when I am wrong, I often do not let students finish their questions before answering them, I am sometimes more abrupt (and less kind) than I should be, especially when I am trying to get through material and my jokes can be off color and corny (as my kids point out to me). I do keep working on my teaching, though, and if you are a teacher, no matter what level you teach at, I think of you as a kindred spirit. 

My Class Content

    In my first two years of teaching, from 1984 to 1986, I was a visiting professor at the University of California at Berkeley, and like many visiting faculty around the world, I was asked to plug in holes in the teaching schedule. I taught six different classes ranging from a corporate finance class to undergraduates to a central banking for executive MBAs, and while I spent almost all of my time struggling to stay ahead of my students, with the material, it set me on a pathway to being a generalist. Once I came to NYU in 1986, I continued to teach classes across the finance spectrum, from corporate finance to valuation to investing, and I am glad that I did so. I am a natural dabbler, and I enjoy looking at big financial questions and ideas from multiple perspectives.

    

    There are two core classes that I have taught to the MBAs at Stern, almost every year since 1986. The first is corporate finance, a class about the first principles that should govern how to run a business, and thus a required class (in my biased view) for everyone in business. 

If you are a business owner or operator, this class should give you the tools to use to make business choices that make the most financial sense. If you work in a business, whether it be in marketing, strategy or HR, this class is designed to provide perspective on how what you do fits into value creation at your business. If you are just interested in business, just as an observer, you may find this class useful in examining why companies do what they do, from acquisitions to buybacks, and when corporate actions violate common sense.

    The second is valuation, a class about how to value or price almost anything, with a tool set for those who need to put numbers on assets. 

Again, I teach this class to a broad audience, from appraisers/analysts whose jobs revolve around valuation/pricing to portfolio managers who are often users of analyst valuations to business owners, whose interests in valuation can range from curiosity (how much is my business worth?) to the transactional (how much of my business should I give up for a capital infusion?) 

    While my class schedule has been filled with these two courses, I developed a third course, investment philosophies, a class about how to approach investing, trying to explain why investors with very different market views and investment strategies can co-exist in a market, and why there is no one philosophy that dominates. 

My endgame for this class is to provide as unbiased a perspective as I can for a range of philosophies from trading on price patterns to market timing, with stops along the way from value investing, growth investing and information trading. It is my hope that this class will allow you to find the investment philosophy that best fits you, given your financial profile and psychological makeup.

    In 2024, I added a fourth course to the mix, one centered around my view that businesses age like human beings do, i.e., there is a corporate life cycle, and that how businesses operate and how investors value them, changes as they move from youth to demise.

I have used the corporate life cycle perspective to structure my thinking on almost every class that I teach, and in this class, I isolate it to examine how businesses age and how they respond to to aging, sometimes in destructive ways.

    In my corporate finance and valuation classes, the raw material comes from financial statements, and I realized early on that my students, despite having had a class or two on accounting, still struggled with reading and using financial statements, and I created a short accounting class, specifically designed with financial analysis and valuation in mind. The class is structured around the three financial statements that embody financial reporting - the income statement, balance sheet and statement of cash flows - and how the categorization (and miscategorization) of expenses into operating, financing and capital expenses plays out in these statements.

As many of you who may have read my work know, I think that fair value accounting is not just an oxymoron but one that has done serious damage to the informativeness of financial statements, and I use this class to explain why.

    Since so much of finance is built around the time value of money (present value) and an understanding of financial markets and securities, I also have a short online foundational class in finance:

As you can see, this class covers the bare basics of macroeconomics, since that is all I am capable to teaching, but in my experience, it is all that I have needed in finance.

    As our access to financial data and tools has improved, I added a short course on statistics, again with the narrow objective of providing the basic tools of data analysis. 

A statistics purist would probably blanch at my treatment of regressions, correlations and descriptive statistics, but as a pragmatist, I am willing to compromise and move along.

    

    As you browse through the content of these classes, and consider whether you want to take one, it is worth noting that they are taught in different formats. The corporate finance and valuation classes will be taught in the spring, starting in late January and ending in mid-May, with two eighty-minute sessions each week that will be recorded and accessible shorts after they are delivered in the classroom. There are online versions of both classes, and the investment philosophies class, that take the form of shorter recorded online classes (about twenty minutes), that you can either take for free on my webpage or for a certificate from NYU, for a fee. 

The accounting, statistics and foundations classes are only in online format, on my webpage, and they are free. All in all, I know that some of you are budget-constrained, and others of you are time-constrained, and I hope that there is an offering that meeting your constraints.

    If you are interested, the table below lists the gateways to each of the classes listed above. Note that the links for the spring 2025 classes will lead you to webcast pages, where there are no sessions listed yet, since the classes start in late January 2025. The links to the NYU certificate classes will take you to the NYU page that will allow you to enroll if you are interested, but for a price. The links to the free online classes will take you to pages that list the course sessions, with post-class tests and material to go with each session:

Class	NYU Spring 2025	Online (free)	NYU Certificate	WhatsApp Discussion Group
Corporate Finance	Link	Link	Link (Fall)	Link
Valuation	Link	Link	Link (Spring & Fall)	Link
Investment Philosophies	NA	Link	Link (Spring)	Link
Corporate Life Cycle	NA	Link	NA	Link
Accounting	NA	Link	NA
Foundations of Finance	NA	Link	NA
Statistics	NA	Link	NA

The last column represents WhatsApp groups that I have set up for each class, where you can raise and answer questions from others taking the class.

My Book (and Written) Content

    Let me begin by emphasizing that you do not need any of my books to take my classes. In fact, I don't even require them, when I teach my MBA and undergraduate classes at NYU. The classes are self contained, with the material you need in the slides that I use for each class, and these slides will be accessible at no cost, either as a packet for the entire class or as a link to the session (on YouTube). To the extent that I use other material, spreadsheets or data in each session, the links to those as well will be accessible as well. 

    If you prefer to have a book, I do have a few that cover the classes that I teach, though some of them are obscenely overpriced (in my view, and there is little that I can do about the publishing business and its desire for self immolation.) You can find my books, and the webpages that support these books, at this link, and a description of the books is below:

Corporate Finance		Valuation		Investment Philosophies		Corporate Life Cycle
Applied Corporate Finance (Wiley, 4th Ed): This is the book that is most closely tied to this class and represents my views of what should be in a corporate finance class most closely.		Investment Valuation (Wiley, 3rd Ed, 4th ed forthcoming): This is my only valuation textbook, designed for classroom teaching. At almost 1000 pages, it is overkill but it is also the most comprehensive of the books in terms of coverage.		Investment Philosophies (Wiley, 2nd Ed): This is the best book for this class, and provides background and evidence for each investment philosophy, with a listing of the personal characteristics that you need to make that philosophy work for you.		Corporate Life Cycle (Penguin Random House, 1st Ed): This is the most recent of my books and it introduces the phases of the corporate life cycle and why business, management, valuation and investment challenges change with each phase.
Corporate Finance (Wiley, 2nd Ed): This is a more conventional corporate finance book, but it has not seen a new edition in almost 20 years.		Little Book of Valuation (Wiley, 2nd Ed): This is the shortest of the books, but it provides the essentials of valuation, and at a reasonable price.		Investment Management (Wiley, 1st Ed): This is a very old book, and one that I co-edited with the redoubtable Peter Bernstein, focused on writings on different parts of the investment process. It is dated but it still has relevance (in my view).
Strategic Risk Taking (Wharton, 1s Ed): This is a book specifically about measuring risk, dealing with risk and how risk taking/avoidance affect value.		Dark Side of Valuation (Prentice Hall, 3rd Ed): This is a book about valuing difficult-to-value companies, from young businesses to cyclical/commodity companies. It is a good add-on to the valuation class.		Investment Fables (FT Press, 1st Ed): This book is also old and badly in need of a second edition, which I may turn to next year, but it covers stories that we hear about how to beat the market and get rich quickly, the flaws in these stories, and why it pays to be a skeptic.
		Damodaran on Valuation (Wiley, 2nd Ed): This was my very first book, and it is practitioner-oriented, with the second half of the book dedicated to loose ends in vlauation (control, illiquidity etc.)
		Narrative and Numbers (Columbia Press, 1st Ed): This was the book I most enjoyed writing, and it ties storytelling to numbers in valuation, providing a basis for my argument that every good valuation is a bridge between stories and numbers.

    Finally, I discovered early on how frustrating it is to be dependent on outsiders for data that you need for corporate financial analysis and valuation, and I decided to become self sufficient and create my own data tables, where I report industry averages on almost every statistic that we track and estimate in finance. These data tables should be accessible and downloadable (in excel), and if you find yourself stymied, when doing so, trying another browser often helps. The data is updated once a year, at the start of the year, and the 2025 data update will be available around January 10, 2025.

A Class Guide

    I would be delighted, if you decide to take one or more of my classes, but I understand that your lives are busy, with jobs, family and friends all competing for your time. You may start with the intent of taking a course, but you may not be able to finish for any number of reasons, and if that happens, I completely understand. In addition, the courses that you find useful will depend on your end game.

• If you own a business, work in the finance department of a company, or are a consultant, you may find the corporate finance course alone will suffice, providing most of what you need.
• If you are in the appraisal or valuation business, either as an appraiser or as an equity research analyst (buy or sell side), valuation is the class that will be most directly tied to what you will do. I do believe that to value businesses, you need to understand how to run them, making corporate finance a good lead in.
• If you plan to be in active investment, working at a mutual fund, wealth management or hedge fund,  or are an individual investor trying to find your way in investing, I think that starting with a valuation class, and following up with investment philosophy will yield the biggest payoff.
• Finally, the corporate life cycle class, which spans corporate finance, valuation and investing, with doses of management and strategy, will be a good add on to any of the other pathways, or as a standalone for someone who has little patience for finance classes but wants a framework for understanding businesses.

As a lead-in to any of these paths, I will leave it to you to decide whether you need to take the accounting, statistics, and foundations classes, to either refresh content you have not seen in a long time or because you find yourself confused about basics:

If you find yourself overwhelmed with any or all of these paths, you always have the option of watching a session or two of any class of your choice. As you look at the choices, you have to consider three realities. 

1. The first is that, unless you happen to be a NYU Stern student, you will be taking these classes online and asynchronously (not in real time). As someone who has been teaching online for close to two decades now, I have learned that watching a class on a computer or display screen is far more draining than being in a  physical class, which is one reason that I have created the online versions of the classes with much shorter session lengths. 
2. The second is that the biggest impediment to finishing classes online, explaining why completion rates are often 5% or lower, even for the best structured online classes, is maintaining the discipline to continue with a class, when you fall behind. While my regular classes follow a time line, you don't have to stick with that calendar constraint, and can finish the class over a longer period, if you want, but you will have to work at it. 
3. The third is that learning, especially in my subject area, requires doing, and if all you do is watch the lecture videos, without following through (by trying out what you have learned on real companies of your choosing), the material will not stick.

    I will be teaching close to 800 students across my three NYU classes, in the spring, and they will get the bulk of my attention, in terms of grading and responding to emails and questions. With my limited bandwidth and time, I am afraid that I will not be able to answer most of your questions, if you are taking the free classes online; with the certificate classes, there will be zoom office hours once every two weeks for a live Q&A. I have created WhatsApp forums (see class list above) for you, if you are interested, to be able to interact with other students who are in the same position that you are in, and hopefully, there will be someone in the forum who can address your doubts. Since I have never done this before, it is an experiment, and I will shut them down, if the trolls take over.

In Closing…

    I hope to see you (in person or virtually) in one of my classes, and that you find the content useful. If you are taking one of my free classes, please recognize that I share my content, not out of altruism, but because like most teachers, I like a big audience. If you are taking the NYU certificate classes, and you find the price tag daunting, I am afraid that I cannot do much more than commiserate, since the university has its own imperatives. If you do feel that you want to thank me, the best way you can do this is to pass it on, perhaps by teaching someone around you. 

YouTube Video

Class list with links

1. Corporate Finance (NYU MBA): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastcfspr25.htm 
2. Valuation (NYU MBA): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcasteqspr25.htm 
3. Corporate Finance (Free Online): https://pages.stern.nyu.edu/adamodar/New_Home_Page/webcastcfonline.htm 
4. Valuation (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastvalonline.htm 
5. Corporate Finance (NYU Certificate): https://execed.stern.nyu.edu/products/corporate-finance-with-aswath-damodaran 
6. Valuation (NYU Certificate): https://execed.stern.nyu.edu/products/advanced-valuation-with-aswath-damodaran 
7. Investment Philosophies (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastinvphil.htm 
8. Investment Philosophies (NYU Certificate): https://execed.stern.nyu.edu/products/investment-philosophies-with-aswath-damodaran 
9. Corporate Life Cycle (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastCLC.htm 
10. Accounting 101 (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastacctg.htm 
11. Foundations of Finance (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcastfoundationsonline.htm 
12. Statistics 101 (Free Online): https://pages.stern.nyu.edu/~adamodar/New_Home_Page/webcaststatistics.htm

WhatsApp Groups for Classes

1. Corporate Finance: https://chat.whatsapp.com/C0yjIAWT2WdLozCHYctU9p
2. Valuation: https://chat.whatsapp.com/LjQBQXcbyh11I17idz176k
3. Investment Philosophies: https://chat.whatsapp.com/IolVsa3qScLJecUtu4uUKO
4. Corporate Life Cycle: https://chat.whatsapp.com/J1V0vwFkIUoCblYp4J3ENs

The Siren Song of Sustainability: The Theocratic Trifecta's Third Leg!

    You might know, by now, of my views on ESG, which I have described as an empty acronym, born in sanctimony, nurtured in hypocrisy and sold with sophistry. My voyage with ESG began with curiosity in my 2019 exploration of what it purported to measure, turned to cynicism as the answers to the Cui Bono (who benefits) question became clear and has curdled into something close to contempt, as ESG advocates rewrote history and retroactively changed their measurements in recent years. Late last year, I looked at impact investing, as a subset of ESG investing, and chronicled the trillions put into fighting climate change, and the absence of impact from that spending. Sometime before these assessments, I also looked at the notion of stakeholder wealth maximization as an idea that only corporate lawyers and strategists would love, and argued that there is a reason, in conventional businesses to stay focused on shareholders. With each of these topics (ESG, impact investing, stakeholder wealth maximization), the response that I got from some of the strongest defenders was that "sustainability" is the ultimate end game, and that the fault has been in execution (in ESG and impact investing), and not in the core idea.  

    I was curious about what sets sustainability apart from the critiqued ideas, as well as skeptical, since the cast of characters (individual and entities) in the sustainability sales pitch seems much the same as for the ESG and impact investing sales pitches.  In critiquing sustainability, I may be swimming against the tide, but less so than I was five years ago, when I first wrote about these issues. In fact, in my first post on ESG, I confessed that I risked being labeled as a "moral troglodyte" for my views, and I am sure that my subsequent posts have made that a reality, but I have a thick skin. This post on sustainability will, if it is read, draw withering scorn from the righteous, and take me off their party invite list, but I don't like parties anyway.

Sustainability: The What, the Why and the Who?

    I have been in business and markets for more than four decades, and while sustainability as an end game has existed through that period, but much of that time, it was in the context of the planet, not for businesses. It is in the last two decades that corporate sustainability has become a term that you see in academic and business circles, albeit with definitions that vary across users. Before we look at how those definitions have evolved, it is instructive to start with three measures of sustainability, measuring (in my view) very different things:

• Planet sustainability, measuring how our actions, as consumers and businesses, affect the planet, and our collective welfare and well being. This, of course, covers everything from climate change to health care to income inequality.
• Product sustainability, measuring how long a product or service from a business can be used effectively, before becoming useless or waste. In a throw-away world, where planned obsolescence seems to be built into every product or service, there are consumers and governments who care about product sustainability, albeit for different reasons.
• Business or corporate sustainability, measuring the life of a business or company, and actions that can extend or constrict that life. 

There are corporate sustainability advocates who will argue that it covers all of the above, and that a business that wants to increase its sustainability has to make more sustainable products, and that doing so will improve planet sustainability. That may be true, in some cases, but in many, there will be conflicts. A company that makes shaving razors may be able to create razor blades that stay sharp forever, and need no replacement, but that increased product sustainability may crimp corporate sustainability. In the same vein, there may be some companies (and you can let your priors guide you in naming them), whose very existence puts the planet at risk, and if planet sustainability is the end game, the best thing that can happen is for these companies to cease to exist. 

    

    Which of these measures of sustainability lies at the heart of corporate sustainability, as practiced today? To get the answers, I looked at a variety of players in the sustainability game, and will use their own words in the description, lest I be accused of taking them out of context:

• Business schools around the world have discovered that sustainability classes not only draw well, and improve their rankings (especially with the Financial Times, which seems to have a fetish with the concept), but are also money makers when constructed as executive classes. NYU, the institution that I teach at, has an executive corporate sustainability course, with certification costing $2,200, but I will quote the Vanderbilt University course description instead, where for a $3,000 price tag, you can get a certificate in corporate sustainability, which is described as " a holistic approach to conducting business while achieving long-term environmental, social, and economic sustainability." 
• Academia: I read through seminal and impactful (as academics, we are fond of both words, with the latter measured in citations) papers on corporate sustainability, to examine how they defined and measured sustainability. A 2003 paper on corporate sustainability describes it as recognizing that "corporate growth and profitability are important, it also requires the corporation to pursue societal goals, specifically those relating to sustainable development — environmental protection, social justice and equity, and economic development." In the last two decades, it is estimated that there have been more than twelve thousand articles published on corporate sustainability, and while the definition has remained resilient, it has developed offshoots and variants.
• Corporate/Business: Companies, around the world, were quick to jump onto the sustainability bandwagon, and sustainability (or something to that effect) is part of many corporate mission statements. The Hartford, a US insurance company, describes corporate sustainability as centered "around developing business strategies and solutions to serve the needs of our stakeholders, while embracing the necessary innovation and foresight to ensure we are able to meet those needs in the decades to come."
• Governments: Governments have also joined the party, and the EU has been the frontrunner, and its definition of corporate sustainability as "integrating social, environmental, ethical, consumer, and human rights concerns into their business strategy and operations" has become the basis for both disclosure and regulatory actions. The Canadian government has used to EU model to create a corporate sustainability reporting directive, requiring companies to report on and spend more on a host on environmental, social and governance indicators. 

I am willing to be convinced otherwise, but all of these definitions seem to be centered around planet sustainability, with varying motivations for why businesses should act on that front, from clean consciences (it is the right thing to do) to being "good for business" (if you do it, you will become more profitable and valuable).

    While corporate sustainability has taken center stage in the last two decades, it is part of a discussion about the social responsibilities of businesses that has been around for centuries. From Adam Smith's description of economics as the "gospel of mammon" in the 1700s to Milton Friedman's full-throated defense of business in the 1970s, it can be argued that almost every debate about businesses has included discussions of what they should do for society, beyond just following the law. That said, corporate sustainability (and its offshoots) have clearly taken a more central role in business  than ever before, and one manifestation is in the rise of "corporate sustainability officers" (CSOs) at many large companies. A PwC survey of 1640 companies in 62 countries, in 2022, found that the number of companies with CSOs tripled in 2021, with about 30% of all companies having someone in that position. A Conference Board survey of hundred sustainability leaders (take the sample bias into account) of the state of corporate sustainability pointed to the expectation that sustainability teams at companies would continue to grow over time. Finally, going back to academia, an indicator of the buzz in buzzwords, a survey paper in 2022 noted the rise in the number of corporate-sustainability related articles in recent years, as well as documenting their focus:

Burbano, Delma and Cobo (2022)

Note that much of the surge in articles came from ESG, which at least for the bulk of this period marched in lockstep with sustainability. Reflecting that twinning, many of the papers on corporate sustainability, just like the papers on ESG, were framed as sustainability being not just good for society but also good for the companies that adopted them. 

    I will admit that I have no idea what a CSO is or does, but I did get a chance to find out for myself, when I was invited to give a talk to the CSOs of fifty large companies. I started that session with a  question, born entirely out of curiosity, to the audience of what they did, at their respective organizations. After about twenty minutes of discussion, it was very clear that there was no consensus answer. In fact, some were as in the dark, as I was, about a CSO's responsibilities and role, and among the many and sometimes convoluted and contradictory answers I heard, here was my categorization of potential CSO roles:

1. CSO as Yoda: Some of the CSOs described their role as providing vision and guidance to the companies they worked at, about the societal effects of their actions, and doing so with a long term perspective. In short, even though they did not make this explicit, they were projecting that they had the training and foresight on how the company and society would evolve over time, and advice the company on the actions that it would need to take to match that evolution. I was tempted, though I restrained myself, to ask what training they had to be such receptacles of wisdom, since a degree or certification in sustainability clearly would not do the trick. I did dig into Star Wars lore, where it is estimated that it takes a decade or two of intense training to become a Jedi, and left open the possibility that there may be an institution somewhere that is turning out sustainability jedis.
2. CSO as Jiminy Cricket: I am a fan of Disney movies, and Pinocchio, while not one of the best known, remains one of my favorites. If you have watched the movie, Jiminy Cricket is the character that sits on Pinocchio's shoulder and acts as his conscience, and for some of the CSOs in the audience, that seemed to be the template, i.e., to act as corporate consciences, reminding the companies that they work for, of the social effects of their actions. The problem, of course, is that like the Jiminy Cricket in the movie, they get tagged as relentless scolds, usually get ignored, and get little glory, even when proved right. 
3. CSO as PR Genius: There were a few CSOs who were open about the fact that they were effectively marketing fronts for companies, with the job of taking actions that could not remotely be argued as being good for the planet and selling them as such. I am not sure whether Unilever's CSO was involved in the process, but the company's push to have each of its four hundred brands have a social or environmental purpose would have fallen into this realm. 
4. CSO as Embalmer: Finally, there were some CSOs who argued that it was their job to ensure that the company would live longer, perhaps even forever. If you are familiar with my work on corporate life cycles, I believe that not much good comes from companies surviving as “walking dead” entities, but in a world where survival at any cost is viewed as success, it is a by product. 

Here are the roles in table form, with the training that would prepare you best for each one:

I am sure that I am missing some of the nuance in sustainability, but if so, remember that nuance does not survive well in business contexts, where a version of Gresham's law is at work, with the worst motives driving out the best.

Sustainability and ESG

    In the last two or three years, corporate sustainability advocates have tried to distance themselves from ESG, arguing that the faults of ESG are of its own doing, and came from ignoring sustainability lessons. I am sorry, but I don't buy it. If ESG did not exist, sustainability would have had to invent it, because much of the growth in sustainability as a money-maker has come from its ESG arm. As I see it, ESG took the abstractions of corporate sustainability and converted them into a score, and it was that much maligned scoring mechanism that caused a surge of adoptions both in corporate boardrooms and among the investment community. It is worth noting that both ESG and sustainability draw their rationale from stakeholder wealth maximization, with the core thesis being that businesses should be run for the benefit of all stakeholders, rather than “just” for shareholders. It is in this context that I used the "theocratic trifecta" to describe how ESG, sustainability and stakeholder wealth are linked, and have been marketed. 

I use the word “theocratic” deliberately, since like theocrats in every domain, some in the sustainability space believe that they own the high ground on virtue, and view dissent as almost sacrilegious. 

    While a scoring mechanism, by itself, can be viewed as having a good purpose, i.e., to create a measure of how much a company is moving towards it sustainability goals, and to hold it accountable, it creates natural consequences that come with all scoring mechanisms:

• Measurers claiming to be objective arbiters, when the truth is that all scores require subjective judgments about what comprises goodness, and the consequences for business profitability and value.
• Businesses that start to understand the scoring process and factors, and then game the scoring systems to improve their scores. Greenwashing is a feature of these scoring systems, not a bug, and the more you try to refine the scoring, the more sophisticated the gaming will become.
• Advocates wringing their hands about the gaming, and arguing that the answer is more detailed definitions of things that defy definition, not recognizing (or perhaps not caring) that this just feeds the cycle and creates even more gaming.

With ESG, we have seen this process play out in destructive ways, with the scoring services (Sustainalytics, S&P, Refinitiv) using not only different criteria to come up with scores, but also changing those criteria in time and companies with the most resources to do so gaming those scoring systems to deliver better ESG scores. Accountants and regulators have added to the mix, by increasing disclosure requirements on almost every aspect of ESG, with little or no tangible benefits to show in terms of actual change.

   Taking a step back and looking at ESG and sustainability as concepts, they share many of the same characteristics:

1. They are opaque: Both ESG and sustainability are opaque to the point of obfuscation, perhaps because it serves the interests of advocates, who can then market them in whatever form they want to. To the pushback from defenders that the details are being nailed down or that there are new standards in place or coming, the argument runs hollow because the end game seems to keep changing. With ESG, for instance, the end game when it was initiated was making the world a better place (doing good), which evolved to generating alpha (excess returns for investors), on to being a risk measure before converting on a disclosure requirement. Defenders argue that there will be convergence driven by tighter definitions from regulators and rule makers, and the EU, in particular, has been in the lead on this front, putting out a Corporate Sustainability Reporting Directive (CSRD) in 2022,  outlining economic activities that contribute to meeting the EU’s environmental objectives. While ESG advocates may be right about convergence, looking to the the bureaucracy in Brussels to have the good sense (on economics and sustainability) to get this right is analogous to asking a long-time vegan where you can get the best steak in town. 
2. They are rooted in virtue: While some of the advocates for ESG and sustainability have now steered away from goodness as an argument for their use, almost every debate about the two topics eventually ends up with advocates claiming to be on the side of good, with critics consigned to the dark side. 
3. Disclosures, over actions:  The path for purpose-driven concepts (sustainability, ESG) seems to follow a familiar arc. They start with the endgame of making the world a better place, are marketed with the pitch that purpose and profits go together (the original sin) and when the lie is exposed, are repackaged as being about disclosures that can be used by consumers and investors to make informed judgments. Both ESG and sustainability have traversed this path, and both seem to be approaching the "it's all about disclosure" phase of the cycle. While that seems like a reasonable outcome, since almost everyone is in favor of more information, there are two downsides to this disclosure drive. The first is that disclosure can become not just a substitute for acting, but an impediment to the change that makes a difference. The second is that as disclosures become more extensive, there is a tipping point, especially as the consequential disclosures are mixed in with minor ones, where users start ignoring the disclosure, effectively removing their information value. 
4. Underplay or ignore sacrifice: Of all the mistakes, the biggest one made in the sales pitch for ESG and sustainability was that you could eat your cake, and have it too. Companies were told that being sustainable would make them more profitable and valuable, investors were sold on the notion that investing in good companies would deliver higher or extra returns and consumers were informed that they could make sustainable choices, with little or no additional cost. The truth is that sustainability will be costly to businesses, investors, and consumers, and why should that surprise us? Through history, being good has always required sacrifice, and it was always hubris to argue that you could upend that history, with ESG and sustainability.

Notwithstanding the money, time and resources that have been poured into ESG and sustainability, there is little in terms of real change on any of the societal or climate problems that they purport to want to change. 

Can sustainability be saved?

    

    I may be a moral troglodyte, because of my views on ESG, sustainability and all things good, but we have a shared interest in making the world a better place, and that leads to  the question of whether corporate sustainability, or at least the mission that it espouses, can be salvaged. I believe that there is a path forward, but it requires steps that many sustainability purists may find anathema:

1. Be clear eyed about what can be achieved at the business level: There is truth to the Milton Friedman adage that the business of business is business, not filling in for social needs or catering to non-business interests. It is true that there are actions that businesses take that can create costs to society, and even if the law does not require it, it behooves us to get businesses to behave better, without asking them to do what governments and regulators should be doing.  For business sustainability to deliver results, that line between business and government action has to be made clearer, and adhered to in practice.
2. Open about the costs to businesses of meeting sustainability goals: Be real about the sacrifices in profitability and value that will be needed for a company to do what's good for society. To the extent that in a publicly traded company, it is not the managers, but one of the stakeholders (shareholders, bondholders, employees or customer), who bear this cost, you need buy in from them, if the sustainability actions are voluntary. For companies that are well managed and have done well for their stakeholders, the sacrifice may be easier to sell, but for badly managed businesses, it will be, and should be, a steeper hill to climb. To the extent that corporate executives and fund managers choose to create costs for others (shareholders in a company, investors in a fund), without their buy in, there is clearly a violation of fiduciary duty that will and should leave them exposed to legal consequences.
3. Clear about who bears these costs: I was recently asked to give testimony to a Canadian parliamentary committee that was considering ways of getting banks to contribute to fighting climate change (by lending less to fossil fuel companies and more to green energy firms), and much of what I heard from committee members and the other experts was about how banks would bear the costs. The truth is that when a bank is either restricted from a  profit-making activity (lending to fossil fuel companies) or forced to subsidize a money-losing activity (lending at below-market rates to green energy companies), the costs are borne by either the bank's shareholders or depositors, or, in some cases, by taxpayers. In fact, given that bank equity is such a small slice of overall capital, it is bank depositors who will be burdened the most by bank lending mandates, and that opens the door to bank failures and worse. 
4. And honest about cost sharing: One of the benefits of recognizing that being good (for the planet or society) creates costs is that we can then also follow up by looking at who bears the costs. It is my view that for much of the past few decades, we (as academics, policy makers and regulators) been far too quick to decide what works for the "greater good", at least as we see it, and oblivious to the reality that the costs of delivering that greater good are borne by the people who can least afford it. 
5. Above all,  drain the gravy train: Both ESG and sustainability have been contaminated by the many people and entities that have benefited monetarily from their existence. The path to making sustainability matter has to start by removing the grifters, many masquerading as academics and experts, from the space. I won’t name names, but if you want to see who you should be putting on that grifter list, many of them will be at the annual extravaganza called COP29, where the useful idiots and feckless knaves who inhabit this space will fly in from distant places to Azerbaijan, to lecture the rest of us on how to minimize our carbon footprint. If you are a business that cares about the planet, fire your sustainability consultants and stop bending business models to meet disclosure needs, and while you are at it, you may want to get rid of your CSO (if you have one), unless you happen to have Yoda on your payroll. 

In all of this discussion, there is a real problem that no one in the space seems to be willing to accept or admit to, and that is much as we (as consumers, investors and voters) claim to care about social good, we are unwilling to burden ourselves, even slightly (by paying higher prices or taxes), to deliver that good. It could be because we are callous, or have become so, but I think the true reason is that we have lost trust in experts, governments and institutions, and who can blame us?  Whether it is the city of San Diego, where I live, trying to increase sales taxes by half a percent or a government imposing a carbon tax, taxpayers seem disinclined to given governments the benefit of doubt, given their history of inefficiencies and broken promises. 

    One argument that I have heard from many advocates for ESG and sustainability is that the pushback against these ideas is coming primarily from the United States, and that much of the rest of the world has bought in to their necessity and utility. If  these people leave the ivory towers and echo chambers that they inhabit, and talk to people in their own environs, they will recognize that the loss of trust is a global phenomenon, and that any consensus that exists is on the surface. There are many reasons that incumbent governments in Canada and Germany (both "leaders" in the climate change fight) are facing the political abyss in upcoming elections, but one reason is the "we know best" arrogance embedded in their climate change strictures and laws, combined with the insulting pitch that the people most affected by these laws will not feel the pain. 

    How do we get trust in institutions back? It will not come from lecturing people on their moral shortcomings (as many will undoubtedly do to me, after reading this) or by gaslighting them (telling them that they are better off when they are clearly and materially not). It will require humility, where the agents of change (academics, governments, regulators) are transparent about what they hope to accomplish, and the costs of and uncertainties about reaching those objectives, and patience, where incremental change takes precedence over seismic or revolutionary change. 

YouTube Video

My posts on ESG, impact investing and stakeholder wealth

1. From Shareholder Wealth to Stakeholder Interests: CEO Capitulation or Empty Doublespeak? (August 2019)
2. Sounding Good or Doing Good? A Skeptical Look at ESG (September 2020)
3. The ESG Movement: The "Goodness" Gravy Train Rolls On! (September 2021)
4. ESG's Russia Test: Trial by Fire or Crash and Burn? (March 2022)
5. Good Intentions, Perverse Outcomes: The Impact of Impact Investing (October 2023)