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Weighing the Evidence: ESG and Equity Returns

categories: ESG Products & Services, Portfolio Management Analytics, Americas, EMEAI, Risk Management Analytics, Investing (Investment Management), Responsible Investing, Risk Management, Asia Pacific, Asset Owners, Equities, Australia, Asset Managers (Quant or Fundamental), LEE Linda-Eling, GIESE Guido, general

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.

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Research_Insight_Weighing_the_Evidence_ESG and Equity Returns.pdf