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Linda-Eling Lee

Linda-Eling Lee
Managing Director, MSCI Research

About the Contributor

As Global Head of Research for MSCI’s ESG Research group, Linda-Eling Lee oversees all ESG-related content and methodology. She leads one of the largest teams of research analysts in the world who are dedicated to identifying risks and opportunities arising from significant ESG issues. Linda received her AB from Harvard, MSt from Oxford, and PhD in Organizational Behaviour from Harvard University. Linda has published research both in management journals such as the Harvard Business Review and MIT’s Sloan Management Review, as well as in top academic peer-reviewed journals.

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Contributions by Linda-Eling Lee

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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. Climate. ESG bubbles. Disclosure. Social inequality. Biodiversity. The topics don’t get much bigger — or more systemic. Here’s our analysis of the five ESG trends that will matter most to companies and their investors in 2021.

  3. 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.

  4. 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?

  5. 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?

  6. 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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  7. 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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  8. 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.

  9. BLOG

    2020 ESG trends to watch 

    Jan 13, 2020 Ric Marshall , Meggin Thwing Eastman , Linda-Eling Lee , Meggin Eastman

    ESG Research

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    ESG themes are long-term, but some can emerge with sudden force. We are watching five trends we believe will unfold in 2020 to catapult ESG investing into the new decade.

  10. We highlight five trends we believe will unfold over 2020: Climate change innovators: spotting the sleeping giants; new terms for capital: ready or not, here comes ESG; Re-valuing real estate: investing in the eye of the hurricane; the new human capital paradox: Juggling layoffs and shortages; and keeping score on stakeholder capitalism: looking for accountability in all the new places.

  11. 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.

  12. BLOG

    2019 ESG趋势展望 

    Jan 22, 2019 Matt Moscardi , Linda-Eling Lee

    ESG Research

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    ESG投资者的漫漫长途已经开始,有很多人也开始支持这个长征1。我们2019年要关注的五个ESG趋势中的每一个,都包含可能被忽视的成本和机遇。

  13. BLOG

    2019年に注目すべきESGトレンド 

    Jan 22, 2019 Linda-Eling Lee , Matt Moscardi

    ESG Research

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  14. PAPER

    ESG Trends to Watch in 2019 

    Jan 22, 2019 Linda-Eling Lee , Matt Moscardi

    Responsible Investing

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    We highlight five of the most pressing challenges and opportunities ESG institutional investors face in 2019: how to deal with the massive amount of plastic waste generated each year; regulations focused on ESG investors; the earlier-than-expected effects of climate change; the big signal revolution and the role of corporate leadership in a world where we’ve seen the disintegration of walls between the executive suite and employees, markets and governments.

     

    To read data from other years, please see our ESG Trends page.

  15. BLOG

    ESG trends to watch in 2019 

    Jan 22, 2019 Linda-Eling Lee , Matt Moscardi

    ESG Research

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    The long haul many are bracing for has already started for ESG investors. Each of our five ESG trends to watch in 2019 contain potentially overlooked costs – and opportunities.

  16. 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?

  17. PAPER

    US Department Of Labor Guidance On ESG Investing Emphasizes Economic Relevance 

    May 17, 2018 Linda-Eling Lee

    Responsible Investing

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    Investors are still digesting the U.S. Department of Labor’s new guidance on environmental, social and governance (ESG) investing. Our initial take: We think the guidance supports consideration of the financial merits of ESG investing.

  18. 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.

  19. Whether it is policy, technological or climactic change, companies face an onslaught of challenges that are happening sooner and more dramatically than many can anticipate.  Investors in turn are looking for ways to position their portfolios to best navigate the uncertainty. In 2018, investors will: use ESG signals to help navigate the evolving size and shape of the emerging markets universe; expand their view of portfolio climate risk to macro exposures across asset classes; accelerate ESG integration into fixed income; look to alternative data sources to balance the growing volume of corporate sustainability disclosure; and increasingly seek opportunities to invest in talent quality.

    To read data from other years, please see our ESG Trends page.

  20. BLOG

    2018 ESG Trends to Watch 

    Jan 16, 2018 Linda-Eling Lee

    ESG Research

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    Bigger, faster, more. Whether due to policy, technological or climatic changes, companies face an onslaught of challenges that are happening sooner and more dramatically than many could have anticipated.

  21. 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.

  22. PAPER

    Have Corporate Controversies Helped or Hurt Performance 

    Oct 17, 2017 Meggin Eastman , Zoltán Nagy , Linda-Eling Lee

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    A Study of Three Portfolio Strategies

    The broad effects of excluding entire business lines, typical of the more traditional values-aligned of a socially responsible portfolio, are generally understood. However, little research has been done on the performance implications of exclusions based on alleged corporate wrongdoing, though such exclusions are common. In this study, we investigate the risk and return impact of excluding companies involved in events negatively impacting stakeholders, testing three model portfolios with increasingly stringent criteria. This article has previously been published by the Journal of Environmental Investing 8, No. 1 (2017) and can be obtained at www.thejei.com.

  23. BLOG

    The USD 220 billion global tax gap: Implications for institutional investors 

    Mar 2, 2017 Linda-Eling Lee

    ESG Research

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    Buoyed by populist sentiment, regulators around the world are considering ways to close corporate tax loopholes and narrow the gap between the statutory tax rate and what companies actually pay. The effort could have significant consequences, both for corporations and for institutional investors who engage portfolio companies over the sufficiency of their tax-related disclosures with the goal of avoiding unforeseen risks.

  24. PAPER

    2017 ESG TRENDS TO WATCH 

    Jan 12, 2017 Matt Moscardi , Linda-Eling Lee

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    This year may usher in a fundamental rethink for investors. Underlying all the major trends we identified for 2017 is a strategic decision point – do we change the way we think about investing, or is this business as usual in a new order? In our annual trends to watch report, we highlight the six biggest ESG forces affecting institutional investors over the long haul.

    To read data from other years, please see our ESG Trends page.

  25. BLOG

    ESG Trends in 2017: A fundamental rethink? 

    Jan 12, 2017 Linda-Eling Lee

    ESG Research

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    This year may ring the bell on a fundamental rethink for investors. Underlying all the major trends we identified for 2017 is a strategic decision point – do we change the way we think about investing, or is this business as usual in a new order?

  26. BLOG

    The tipping point: Women on boards and financial performance 

    Dec 13, 2016 Linda-Eling Lee

    ESG Research

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    msci women on boards 2016 A growing body of research shows that having three women on a corporate board represents a “tipping point” in terms of influence, which is reflected in financial performance. Our analysis from last year looked at a snapshot of global companies in 2015 with strong female leadership, finding that they enjoyed a Return on Equity of 10.1% per year versus 7.4% for those without such leadership.

  27. BLOG

    Your portfolio’s carbon footprint may be smaller than you think 

    Sep 2, 2016 Linda-Eling Lee

    ESG Research

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    In recent years, many institutional investors have committed to measure and lower exposure to carbon emissions in their portfolios. But that presents a challenge: how to estimate such exposure, given the lack of disclosure by most companies about their carbon emissions?

  28. PAPER

    Filling the Blanks: Comparing Carbon Estimates Against Disclosures 

    Sep 1, 2016 Manish Shakdwipee , Linda-Eling Lee

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    In December 2015, we identified 277 companies that were constituents of the MSCI ACWI Investable Market Index (IMI) that had disclosed their 2013 scope 1+2 carbon emissions in 2015 for the first time. This provided a unique opportunity to test out carbon estimation models on which institutional investors have had to rely. We found that the methods that have been around the longest – which rely on Economic Input Output Life Cycle Analysis (EIO-LCA) models – were not very accurate when compared against company disclosure. In contrast, an alternative approach developed by MSCI ESG Research which relies on historical data reported by the company or recently reported data by a sample of comparable companies produced closer estimates.

  29. PAPER

    Scenarios, Stress Tests and Strategies for Second Quarter 2016 - The Rise of Populism 

    Jul 14, 2016 Raghu Suryanarayanan , Thomas Verbraken , Linda-Eling Lee , Carlo Acerbi , Manish Shakdwipee , Remy Briand

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    The decision by a majority of U.K. voters to leave the European Union shines a light on fissures between perceived winners and losers from globalized markets and highlights for investors the importance of factoring the consequences of inequality and popular discontent into their views. The latest edition of MSCI’s “Scenarios, Stress Tests and Strategies” examines the potential impacts on institutional portfolios of a tide of populist sentiment across Europe and the U.S.

  30. BLOG

    The Crisis of Affordability in Real Estate 

    Jun 8, 2016 Linda-Eling Lee

    ESG Research

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    Two-thirds of the world’s population is expected to live in cities by 2050, up from 54% in 2014, according to the United Nations. Yet, as of the end of 2015, we found that housing for people in the middle of the income pyramid is unaffordable for most cities and countries that we studied.

  31. BLOG

    2016 ESG TRENDS TO WATCH: OPPORTUNITIES AND RISKS 

    Jan 11, 2016 Linda-Eling Lee

    ESG Research

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    Environmental, social and governance concerns may play a growing role in investment matters in 2016. These trends reflect a softening economy, a long-term shift to a low carbon economy, a generational changeover and institutional forces.

  32. BLOG

    RAISING MINIMUM GOVERNANCE STANDARDS 

    Dec 4, 2015 Linda-Eling Lee

    ESG Research

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    Institutional investors concerned with excessive investor and corporate focus on short-term results are seeking to improve minimum corporate governance standards of their portfolio companies.

  33. BLOG

    Women on Boards: Global Trends in Gender Diversity 

    Nov 30, 2015 Linda-Eling Lee

    ESG Research

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    Many institutional investors are increasingly focused on the gender composition of company boards, according to our research. Some studies show significant outperformance by companies with women on boards, though no one can show a direct link between the two.

  34. BLOG

    RE-EXAMINING THE TAX GAP FOR MSCI WORLD COMPANIES 

    Jun 3, 2015 Linda-Eling Lee

    ESG Research

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    Regulatory authorities are now taking a much tougher approach to corporate tax rates. Since we explored the topic in December 2013 (The ‘Tax Gap’ in the MSCI World), the regulatory outlook has shifted substantially.

  35. PAPER

    Beyond Divestment: Using Low Carbon Indexes 

    Mar 26, 2015 Linda-Eling Lee , Véronique Menou , Remy Briand

    Investing (Investment Management) , Responsible Investing

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    Winner of the 2015 IRRC Institute Investor Research Award for best practitioner paper.

    Approaches based on divesting certain sectors effectively can help asset owners communicate their concerns about the risks of climate change to stakeholders. However, they ignore short-term benchmark risk. Further, a focus on divesting reserves disregards fixed assets that are at risk of losing value because they depend on burning fossil fuel reserves. This paper provides a framework for evaluating ways to reduce two dimensions of carbon exposure - current carbon emissions and potential future emissions embedded in fossil fuel reserves - and explores new and more financially viable ways of managing carbon risk.

Regulation