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Guido Giese

Guido Giese
Executive Director, MSCI Research

About the Contributor

Guido Giese is an Executive Director in the Core Equity Research team. He is responsible for applied research and thought leadership in ESG integration, impact investing and factor investing. Previously, Guido was responsible for the sustainability index solutions business at RobecoSAM, following his tenure as Head of Research and Development at index provider STOXX Ltd. He holds a PhD in Applied Mathematics from the Swiss Federal Institute of Technology Zurich.

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Contributions by Guido Giese

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  1. PAPER

    Deconstructing ESG Ratings Performance: Risk and Return for E, S And G by Time Horizon, Sector and Weighting 

    Mar 30, 2021 Guido Giese , Zoltán Nagy , Linda-Eling Lee

    Investing (Investment Management) , Portfolio Construction and Optimization , Responsible Investing

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  2. BLOG

    How Have Stocks Responded to Changes in Climate Policy? 

    Mar 1, 2021 Guido Giese , Zoltán Nagy , Bruno Rauis

    ESG Research , Global Investing

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    To what extent has climate risk been priced into equity markets? Is there a “brown” discount and a “green” premium? Has this shifted over time? How can we model such risks as the world moves toward net-zero targets? We examine the financial impact of climate transition risk on global equity markets.

  3. PAPER

    Foundations of Climate Investing: How Equity Markets Have Priced Climate Transition Risks 

    Mar 1, 2021 Guido Giese , Bruno Rauis , Zoltán Nagy

    Investing (Investment Management) , Responsible Investing , Asset Pricing and Valuation

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  4. BLOG

    How Are High-ESG-Rated Bond Portfolios Distinct? 

    Feb 5, 2021 Rohit Mendiratta , Hitendra D Varsani , Guido Giese , Hitendra Varsani

    Fixed Income , Risk Management , ESG Research

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    ESG investing makes up an increasingly large footprint in equity portfolios, but ESG integration in bond portfolios is still in its early days. We examine the characteristics that make high-ESG-rated corporate-bond portfolios distinct.

  5. PAPER

    Better Together: Policy Benchmarks, Active Equity and ESG 

    Jan 25, 2021 Zoltán Nagy , Guido Giese , Raman Subramanian , Anil Rao

    Portfolio Construction and Optimization , Responsible Investing

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  6. BLOG

    Is ESG Investing a Price Bubble? Probably Not. 

    Dec 9, 2020 Guido Giese , Navneet Kumar , Zoltán Nagy

    ESG Research

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    Inflows into ESG funds have soared in recent years and months, in part motivated by outperformance since the COVID-19 pandemic erupted. But have these inflows become a self-fulfilling prophecy, creating an ESG bubble?

  7. BLOG

    What ESG Ratings Tell Us About Corporate Bonds 

    Nov 11, 2020 Rohit Mendiratta , Hitendra D Varsani , Guido Giese , Hitendra Varsani

    ESG Research , Risk Management

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    How did incorporating ESG factors affect the performance of corporate-bond portfolios? Did ESG add insights beyond credit ratings? How did ESG impact risk and performance of investment-grade and high-yield bonds? Short-dated versus long-dated bonds?

  8. PAPER

    Foundations of ESG Investing in Corporate Bonds 

    Nov 11, 2020 Guido Giese , Hitendra Varsani , Rohit Mendiratta

    Risk Management

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    Environmental, social, and governance (ESG) investing is a very broad field with many different investment approaches addressing various investment objectives across asset classes. While there are many studies relating to ESG in equities, the risk assessment of ESG considerations within fixed income may be equally if not more important. Bonds have limited upside, but in a negative scenario, investors can potentially lose all their invested capital. At a top level, we can break down ESG investing into three main areas that each has its own investment objective (Exhibit 1): first, ESG incorporation, in which the key objective is to improve the risk-return characteristics of a portfolio; second, values-based investing, in which investors seek to align their portfolio with their norms and beliefs; and third, impact investing, in which investors want to use their capital to trigger change for social or environmental purposes — for example, to accelerate the decarbonization of the economy. In this paper, we focus on the first investment objective — ESG as a means to achieve

  9. PAPER

    Combining E, S, and G Scores: An Exploration of Alternative Weighting Schemes 

    Sep 2, 2020 Guido Giese , Zoltán Nagy , Linda-Eling Lee

    Investing (Investment Management) , Portfolio Construction and Optimization , Responsible Investing

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    How an overall ESG rating is constructed can significantly impact its usefulness. We tested two approaches: equal weighting and backward optimization. Equally weighting E, S, and G pillar scores across sectors showed less financial significance than the stand-alone G pillar score — that is, without E and S scores — over the 13-year study period. Backward optimization showed greater significance than stand-alone G scores but may underestimate the importance of ESG indicators to financial results over longer periods. These results suggest that investors seeking to combine E, S, and G into an aggregate score should proceed with caution. ©2020 Pageant Media. Republished with permission of IPR Journals, from “Combining E, S, and G Scores: An Exploration of Alternative Weighting Schemes.” Linda-Eling Lee, Guido Giese and Zoltan Nágy. Vol. 1, No. 1, 2020.

  10. BLOG

    ESG Ratings: How the Weighting Scheme Affected Performance 

    Jun 29, 2020 Zoltán Nagy , Linda-Eling Lee , Guido Giese

    Global Investing , ESG Research

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    Our recent research suggests that environmental and social issues were more industry specific and tended to show up in financial measures over a longer time frame compared to governance issues. How can E, S and G issues be combined?

  11. BLOG

    Which ESG Issues Mattered Most? Defining Event and Erosion Risks 

    Jun 22, 2020 Guido Giese , Zoltán Nagy , Linda-Eling Lee

    Global Investing , ESG Research

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    Very different ESG issues can be material for different industries. Our research suggests that risks can be divided into two main types: “event” risks and “erosion” risks to companies’ long-term competitiveness. Which ones mattered most for E, S and G?

  12. BLOG

    Welche ESG-Kriterien waren die wichtigsten? Definition von Ereignis- und Erosionsrisiken 

    Jun 22, 2020 Guido Giese , Zoltán Nagy , Linda-Eling Lee

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  13. BLOG

    Geht es bei ESG nur um das „G“? Das hängt von Ihrem Zeithorizont ab 

    Jun 15, 2020 Linda-Eling Lee , Guido Giese , Zoltán Nagy

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  14. BLOG

    Is ESG All About the ‘G’? That Depends on Your Time Horizon. 

    Jun 15, 2020 Linda-Eling Lee , Guido Giese , Zoltán Nagy

    Global Investing , ESG Research

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    The conventional wisdom has it that governance is the most dominant of the three E, S and G pillars. But our analysis finds different results when looking at contribution to performance over different time horizons.

  15. BLOG

    MSCI ESG Indexes during the coronavirus crisis 

    Apr 22, 2020 Zoltán Nagy , Guido Giese

    ESG Research , Emerging Markets , Global Investing

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    The COVID-19 outbreak is the first real-world test since the 2008 global financial crisis of the resilience of companies with high MSCI ESG Ratings. We analyze the performance of four standard MSCI ESG Indexes over Q1 2020 and longer periods.

  16. BLOG

    新冠疫情期间的 MSCI ESG 指数 

    Apr 22, 2020 Zoltán Nagy , Guido Giese

    ESG Research , Emerging Markets , Global Investing

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    在新冠疫情的恐慌抛售期间以及更长时期内,我们将四个全球 MSCI ESG 指数与其母指数进行了比较。

  17. BLOG

    Have regional equity-market correlations risen? 

    Nov 15, 2019 Roman Kouzmenko , Guido Giese

    Global Investing

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    Global equity investors use regions as building blocks in asset allocation, typically segregating markets by how developed they are and by geography. Has globalization reduced the potential for geographical portfolio diversification?

  18. BLOG

    Looking inside ESG indexes 

    Aug 30, 2019 Meggin Thwing Eastman , Guido Giese , Meggin Eastman

    ESG Research

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    Many investors want to stick to their values or beliefs, as well as meet certain financial objectives. How can ESG indexes  help them address these goals?

  19. This paper explains the different methodologies investors can use to integrate ESG considerations into a benchmark, assess their differences in terms of financial and ESG characteristics and understand potential trade-offs. In the financial industry, benchmarks are used at a strategic level — i.e., as policy benchmarks for defining the eligible investment universe or helping investors determine asset allocations — as well as at an implementation level — i.e., as a performance benchmark for actively or index-based allocations. This paper focuses on ESG integration and the reflection of investors’ values and constraints.

  20. PAPER

    Weighing the Evidence: ESG and Equity Returns 

    Apr 12, 2019 Guido Giese , Linda-Eling Lee

    Investing (Investment Management) , Responsible Investing , Risk Management

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    Why has there been no clear consensus as to whether ESG has improved returns on a risk-adjusted basis? We find that many of the ESG investing methodologies used in studies were designed to meet social or ethical values and not financial objectives. To understand the link between companies’ ESG characteristics and their financial risk and performance, it is important to evaluate only the studies that use ESG methodologies specifically designed to identify financially relevant issues, such as MSCI ESG Ratings.

  21. Many researchers have studied the link between companies’ Environmental, Social and Governance (ESG) characteristics and financial risk and performance. This paper examines some of the underlying economic questions: How have markets priced ESG characteristics? Have they been fully priced? Have there been sweetspots? How quickly did the market incorporate ESG information? We investigate these questions by looking into how changes in companies’ ESG profiles have historically predicted equity price movements while all other influences, including the market, remain controlled. We find that ESG momentum may offer important new insights into how global markets price stocks.

  22. PAPER

    Foundations of ESG Investing – Part 4: Integrating ESG into Factor Strategies and Active Portfolios 

    Jun 7, 2018 Laura Nishikawa , Guido Giese , Dimitris Melas , Zoltán Nagy , Linda-Eling Lee

    Investing (Investment Management) , Portfolio Construction and Optimization , Responsible Investing

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    How can ESG characteristics be integrated consistently across factor-based and active equity allocations? In Part 4 of the Foundations of ESG Investing paper, we discuss two approaches to applying ESG ratings to factor-based allocations – a one-step and a two-step approach – asking which has done a better job at combining the underlying strategy with ESG while maintaining exposure to target factors. We then investigate overlaying ESG ratings and ESG momentum on the historical holdings of nearly 1,200 actively managed global equity funds. What would have been the impact on their risk and return?

  23. PAPER

    Foundations of ESG Investing – Part 3: Integrating ESG into Indexed Institutional Portfolios 

    May 16, 2018 Guido Giese , Linda-Eling Lee , Dimitris Melas , Zoltán Nagy , Laura Nishikawa

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    According to recent surveys, asset owners’ have shifted their main focus to ESG’s financial benefits, as opposed to social benefits. In the third part of this paper, we discuss how ESG can be integrated into indexed allocations using MSCI ESG Ratings, which provided better risk-adjusted returns from August 2010 to December 2017 than the MSCI ACWI Index. We used existing best-in-class selection-based index methodologies (the MSCI ESG Leaders Index) for the creation of hypothetical global and regional indexed allocations replicating these indexes. We observed significant regional variations in ESG profiles and performance during our study period, but all showed a clear reduction in key risk measures. Part 3: ©2019 Pageant Media. Republished with permission of IPR Journal, from “Performance and Risks Analysis of Index-based ESG Portfolios.” Guido Giese, Linda-Eling Lee, Dimitris Melas, Zoltan Nagy, and Laura Nishikawa. Vol. 9, No. 4, 2019.

  24. Many studies have focused on the relationship between companies with strong ESG characteristics and corporate financial performance.  However, these have often struggled to show that positive correlations — when produced — can in fact explain the behavior. This paper provides a  link between ESG information and the valuation and performance of companies, both through their systematic risk profile (lower costs of capital and higher valuations) and their idiosyncratic risk profile (higher profitability and lower exposures to tail risk). The research suggests that changes in a company’s ESG characteristics may be a useful financial indicator. ESG ratings may also be suitable for integration into policy benchmarks and financial analyses. Part 1: ©2019 Pageant Media. Republished with permission of IPR Journal, from “Foundations of ESG Investing: How ESG Affects Equity Valuation, Risk, and Performance.” Guido Giese, Linda-Eling Lee, Dimitris Melas, Zoltan Nagy, and Laura Nishikawa. Vol. 45, No. 5, 2019.

  25. BLOG

    Has ESG affected stock performance? 

    Nov 29, 2017 Guido Giese

    ESG Research

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    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.”

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