ESG criteria can boost performance, says RCM

The use of environmental, social and governance (ESG) criteria when stock picking can lead to outperformance, according to a white paper from global asset manager RCM.

This challenges the view held by some that ESG can have a drag effect on returns.

Using data predominantly sourced from MSCI ESG Research, RCM’s sustainability research team discovered that portfolios investing in companies with above-average ESG ratings during the turbulent 2006-2010 period could have returned an extra 1.6% pa.

The findings were particularly marked for portfolios of European companies, RCM commenting that this reflects greater integration of ESG factors in Europe than in the US.

Bozena Jankowska, global head of sustainability research at RCM, said: “This study adds to the growing body of research that demonstrates that the introduction of ESG values into corporate strategy can lead to increased efficiency and innovation, and a consequent boost to revenues and profits.”

She added: “As ESG data becomes more widely reported, consistent and interpreted, investors can apply this information to the investment process with confidence. As market participants incorporate this information, we expect the impact on returns to increase going forward.”

©2011 funds europe

HAVE YOU READ?

THOUGHT LEADERSHIP

The tension between urgency and inaction will continue to influence sustainability discussions in 2024, as reflected in the trends report from S&P Global.
FIND OUT MORE
This white paper outlines key challenges impeding the growth of private markets and explores how technological innovation can provide solutions to unlock access to private market funds for a growing…
DOWNLOAD NOW

CLOUD DATA PLATFORMS

Luxembourg is one of the world’s premiere centres for cross-border distribution of investment funds. Read our special regional coverage, coinciding with the annual ALFI European Asset Management Conference.
READ MORE

PRIVATE MARKETS FUND ADMIN REPORT

Private_Markets_Fund_Admin_Report

LATEST PODCAST