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Looking inside ESG indexes 

Some investors want their investments to reflect their values or beliefs, such as avoiding reputational risk or complying with client mandates by avoiding companies involved in major scandals or business activities such as tobacco or weapons. But we have observed institutional investors increasingly are motivated by financial concerns in integrating environmental, social and governance (ESG) information into their portfolios.

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Has ESG affected stock performance? 

Are ESG characteristics tied to stock performance? Many researchers have studied the relationship between companies with strong environmental, social and governance (ESG) characteristics and corporate financial performance. A major challenge has been to show that positive correlations — when produced — explain the behavior. As the classic phrase used by statisticians says, “correlation does not imply causation.”