Alpha in ESG

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Presented by

Guido Giese, Dana Hanby

About this talk

An upswing of data that suggests that there is a relationship between the financial performance of a portfolio and sustainability led to increased interest of investors in ESG funds. As the evidence compiled, there has been more and more pressure put on companies to disclose what are their risks and opportunities related to ESG. The concerted effort of policymakers, standards setters, and regulators helps to increase standardisation – but can an ESG Fund that uses standardised data outperform? Theoretically, standardised data should be already priced in. And what exactly do we mean, when we say an “ESG Fund” when discussing if it outperforms (or underperforms)? And does an improvement in the ESG fund’s performance reflect an improvement in the environmental factors in the real economy, considering that climate metrics can be influenced not only by the actual emissions of companies in the portfolio, but by portfolio managers’ decisions, and other financial variables? Changes to the weight in the portfolio or companies’ enterprise values will impact a climate-related investment strategy but may do little to reduction of emissions in the real economy. The result can be similar in the implementation of a divestment strategy. What Climate/ESG metrics do you use to assess and monitor your portfolio? Can you achieve alpha through ESG? Does your Carbon Footprinting attribution reflect what is happening in the real economy? Will the data that you are using stand up to audit? These and many more questions we will discuss with Guido Giese, MSCI’s Global Head of Research for ESG and Climate Solutions, who leads applied research and thought leadership on ESG integration and impact and climate investing. Moderated by Dana Hanby, Managing Director, ESG Nexus
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