Scientific Beta

AsianInvestor: "The evidence is clear: ESG funds are outperforming their conventional counterparts. But some experts are questioning the traditional explanations for why that is. (...) “Is it that having good ESG practices helps companies improve profitability? Or is it just that companies with high profitability have the resources to also develop ESG policies?” said Felix Goltz, director at think-tank Scientific Beta, part of France’s EDHEC Business School."

AsianInvestor 14/06/2021

"(...) The evidence is clear: ESG funds are outperforming their conventional counterparts. But some experts are questioning the traditional explanations for why that is. (...) “Is it that having good ESG practices helps companies improve profitability? Or is it just that companies with high profitability have the resources to also develop ESG policies?” said Felix Goltz, director at think-tank Scientific Beta, part of France’s EDHEC Business School. Goltz has co-written a paper showing that quality factors such as profitability (gross profits divided by assets) and the conservative nature of investment can explain much of the purported ESG outperformance that occurs. Adjust for these and no alpha, or abnormal returns, is gained from information on ESG ratings, the study shows. His findings imply that investors would do just as well by investing in firms with high profitability who are disciplined about how they deploy capital. (...)"