Scientific Beta

Partners in Fire: "A study by Scientific Beta claimed that ESG investing does not offer downside risk protection that its proponents claim it does. The researchers say, ”Our findings do not question that ESG strategies can offer substantial value to investors. Instead, they suggest that investors who look for value-added through outperformance are looking in the wrong place.” Scientific Beta studied 24 ESG strategies that were claimed to be outperforming by other academic papers."

Partners in Fire 12/09/2021

"(...) A study by Scientific Beta claimed that ESG investing does not offer downside risk protection that its proponents claim it does. The researchers say, ”Our findings do not question that ESG strategies can offer substantial value to investors. Instead, they suggest that investors who look for value-added through outperformance are looking in the wrong place.” Scientific Beta studied 24 ESG strategies that were claimed to be outperforming by other academic papers. The researchers did find evidence of these investments outperforming. However, in all markets, they found that nearly three-quarters of the instances of outperformance were due to quality metrics. These include conservative investment and high profitability. The response to this study has been mixed. While some managers and investors disagree with it, others are relieved that someone has said out in the open what was previously being whispered about ESG investing in the financial market. But Scientific Beta is not the first to warn about the potentially flawed underlying analyses surrounding ESG investing. (...)"