Can ESG Add Alpha?
Popular interest in Environmental, Social and Governance (ESG) integration has grown considerably over the past few years, but some institutional investors remain concerned that the inclusion of ESG factors in their process may come at the cost of weaker risk-adjusted returns.
Recent research finds that this performance trade-off does not always occur and that ESG factors may add alpha. MSCI analyzed stock returns of two global developed market strategies in the report "Can ESG add Alpha" and found that both outperformed the global benchmark during the last eight years, while also improving the ESG profile of the portfolios. Credit Suisse analysed ESG strategies for the Australian local market "ESG-α Series - Finding Alpha in ESG" and found similar results.
- Sandra McCullagh, Head of Environment, Social, Governance Research, Credit Suisse
- Richard Hitchens, Quantitative Research Analyst, Credit Suisse
- Chris Parks, ESG Analyst, Credit Suisse
- Linda-Eling Lee, Executive Director, Global Head of ESG Research, MSCI
- Zoltan Nagy, Vice President, Equity Research, MSCI
- Michael Salvatico, Vice President, ESG Research, MSCI (Moderator)