Scientific Beta

Financial Investigator: "Although investors are increasingly incorporating ESG criteria into their investment practices, standards and definitions concerning ESG still remain contentious. What is the impact of this ESG confusion on financial performance?"

Financial Investigator 12/03/2024

By Giovanni Bruno and Felix Goltz, Senior Quantitative Analyst and Research Director at Scientific Beta respectively

"(...) While investors are incorporating sustainability criteria into their investment strategies, defining sustainability and identifying material ESG issues remain contentious. The absence of clear standards has led to a large disparity of metrics, a phenomenon commonly referred to as ESG confusion. Investors interested in sustainable investing strategies must assess whether such confusion has an impact on financial performance. For example, we have recently examined the performance dispersion in the cross-section of a set of ESG funds invested in the US stocks. (...)".