Social Sharing
Extended Viewer
Comparing Risk and Performance for Absolute and Relative ESG Scores
Aug 24, 2020
ESG investing is undergoing a pivotal shift. Investors are increasingly moving away from asking “if” ESG can add value to their strategies, and toward questions of “how” and “where.” As investors debate whether an absolute or industry-relative score may serve them better, we tested how these different ESG signals correlated with financial performance. Both scores correlated with higher profitability characteristics and lower levels of idiosyncratic and stock-specific risk. The industry-relative score had a stronger correlation with factors linked to cash-flow, including gross profitability. The absolute score was more useful for differentiating companies’ exposure to idiosyncratic risk.
Download
Research Authors
Research Authors
- Ankit Sayani - Vice President, MSCI Research
- Bentley Kaplan
Related Content
Research & Insights
Learn MoreRegulation
Cookie Preferences
Accept all cookies
This website uses cookies to remember users and understand ways to enhance their experience.
For more information, please visit our Cookie Notice.
Strictly Necessary, Functionality and Performance Cookies
We use cookies to enable you to move around our website and use its features, to provide you with functionality by remembering choices you make and provide enhanced features, and to learn how our website is performing and make improvements.
For more information, please visit our Cookie Notice.