Scientific Beta

MoneyWeek: "Want to do your bit for the environment? Don’t invest in a climate change fund. That’s according to a new paper – Doing Good or Feeling Good? Detecting Greenwashing in Climate Investing – by researchers Noel Amenc, Felix Goltz and Victor Liu at French business school Edhec. (...) One is that climate data accounts for a very small portion (a maximum of 12%) of the rationale for including a given stock in an index. Market capitalisation matters far more. In other words, a fund manager can run a “closet business-as-usual” fund stuffed with big companies, but market it as a “green” fund."

MoneyWeek 02/10/2021

"(...) Want to do your bit for the environment? Don’t invest in a climate change fund. That’s according to a new paper – Doing Good or Feeling Good? Detecting Greenwashing in Climate Investing – by researchers Noel Amenc, Felix Goltz and Victor Liu at French business school Edhec. As Steve Johnson notes in the Financial Times, not only do such funds not help, they may even be “undermining the fight against global warming”. The authors looked at exchange-traded funds issued in Europe which track various climate-focused indices from major index providers. They found several problems. One is that climate data accounts for a very small portion (a maximum of 12%) of the rationale for including a given stock in an index. Market capitalisation matters far more. In other words, a fund manager can run a “closet business-as-usual” fund stuffed with big companies, but market it as a “green” fund. (...)"