Scientific Beta

Financial Times: "Finance professionals have been willing to believe for several years that a portfolio exposure to low-carbon stocks would be profitable in the long run. The sole logic of profit should therefore incite institutions to redirect their investments towards the most virtuous businesses in terms of carbon footprint. Unfortunately, any serious analysis of how financial markets operate and how financial asset prices are formed leads one to believe that this natural evolution of financial markets towards a greener world is more than a little doubtful."

Financial Times 25/07/2016

"(...) Finance professionals have been willing to believe for several years that a portfolio exposure to low-carbon stocks would be profitable in the long run. The sole logic of profit should therefore incite institutions to redirect their investments towards the most virtuous businesses in terms of carbon footprint. Unfortunately, any serious analysis of how financial markets operate and how financial asset prices are formed leads one to believe that this natural evolution of financial markets towards a greener world is more than a little doubtful. (...) Recent research shows it is entirely possible to reduce a portfolio’s carbon footprint dramatically — by more than 80 per cent — while guaranteeing improved profitability. To do so, it is necessary to exclude companies with the largest carbon footprints, then use traditional portfolio construction techniques that do not concern themselves with the future excess returns of green stocks but are based on the right exposure to traditional rewarded risk factors. Such a green strategy is profitable, not because it is green but because it is smart. (...)"