Scientific Beta

Adviser Voice: "A new study from global index provider and research house Scientific Beta, Green Dilution: How ESG Scores Conflict with Climate Investing, provides clear evidence of the dangers for investors of mixing ESG and carbon scores in equity portfolio weighting schemes, as it can come at great carbon cost for green investors. “The green dilution is very strong, regardless of which ESG factors and scores are targeted as objectives, with our research revealing an average dilution of 92% across our portfolios,” said Erik Christiansen, Head of Investment Solutions for Scientific Beta."

Adviser Voice 31/01/2024

"(...) A new study from global index provider and research house Scientific Beta, Green Dilution: How ESG Scores Conflict with Climate Investing, provides clear evidence of the dangers for investors of mixing ESG and carbon scores in equity portfolio weighting schemes, as it can come at great carbon cost for green investors. “The green dilution is very strong, regardless of which ESG factors and scores are targeted as objectives, with our research revealing an average dilution of 92% across our portfolios,” said Erik Christiansen, Head of Investment Solutions for Scientific Beta. “In other words, adding combinations of ESG scores to carbon intensity as a weight determinant in developed equity portfolios dilutes 92% of the initial carbon reduction objective. Only 8% of the carbon reduction objective survived the inclusion of ESG scores in portfolio weighting schemes,” said Mr Christiansen. The green dilution has a simple explanation: the correlation between ESG scores and carbon intensity is close to zero. (...)"