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ESG “could lead to alpha”, investors say

ESGEvidence has emerged to challenge the idea that investing with a responsible edge will lead to lower investment returns.

RBC Global Asset Management found that 38% of survey respondents believed integrating environmental, social and governance (ESG) factors into investments could help generate alpha.

The firm said this was a “significant increase” from a 2017 survey when 24% of the respondents said ESG could be a source of alpha.

Nevertheless, 20% of the 540 respondents in this year’s survey did not believe ESG integration was an alpha source and the majority (42%) said they were not sure.

A wider finding in the survey showed that 90% of institutional investors believed ESG integration would mean portfolios were likely to perform “as well” or “better” than non-ESG integrated portfolios.

Judy Cotte, head of corporate governance and responsible investment at RBC GAM, said these and other findings contained in the firm’s ‘Charting a sustainable advantage’ report “confirms that the majority of institutional investors and consultants have either adopted ESG principles or are actively looking at how to do so”.

The research also found that over half of those surveyed said they considered ESG integration to be part of their fiduciary duty.

RBC GAM said responsible investing was growing and that barriers to more adoption could be inadequate resources and access to quality information as opposed to philosophical opposition to the idea.

Opinion: ESG and returns

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