On July 10, 2017 Lipper Alpha Insight published an article answering the questions: “How do ESG, or environment, social, and governance investments, perform? When do these strategies work, and why?
The article concisely describes the key findings of 10 studies that demonstrate outperformance of ESG-related bonds and equities, both individual and in funds or indices. The studies range from “Friede, Busch, and Bassen’s landmark metastudy that reviewed the results of 2,200+ studies from 1970 through 2014” to analysis of individual funds and indices. The research covers different indicators such as change in ESG scores over time, ESG integration, materiality analysis, relationship between ESG scores and credit metrics, and valuation of intangibles.
This brief synopsis of research is a useful primer, particularly for those who still equate SRI with simple exclusion, restricted investment universe and necessary underperformance versus the mainstream.
You may read the article on the Lipper Alpha Insight internet site.