Scientific Beta

Forbes: ""When you look at the ESG ratings of Apple, you see they go from very good to very bad," says Abraham Lioui, co-author of a new paper published last week by EDHEC Business School and Scientific Beta. "Rating disagreement leads to higher effective risk aversion, higher market premium as well as lower investor demand," says the paper."

Forbes 07/03/2021

"(...) A new study shows that confusion around firms' environmental, social and governance (ESG) impacts are causing investors to ditch them. This is the opposite of what ESG investing is supposed to do. Around $40 trillion has been invested into companies and funds that conform to higher ESG standards, and more is being added as investors increasingly want to see their wealth put to good causes. Surrounding this $40 trillion is a booming industry of ratings agencies that provide investors with data on how well or poorly a company is performing on ESG scores. Rarely do these ratings agencies agree, however. "When you look at the ESG ratings of Apple, you see they go from very good to very bad," says Abraham Lioui, co-author of a new paper published last week by EDHEC Business School and Scientific Beta. "Rating disagreement leads to higher effective risk aversion, higher market premium as well as lower investor demand," says the paper. This in turn drives down company share prices, inadvertently punishing those that are trying to progress on issues like climate change. "This could further limit their capacity to make socially responsible investments and generate real social impact," finds the research. (...)"