Scientific Beta

The Wire: "A recent study by the EDHEC Business School found that market capitalisation is the primary factor determining portfolio weights, accounting for up to 88% of the weights – while climate considerations play second fiddle at best."

The Wire 26/02/2022

"(...) Fourth, an increasing number of research studies have raised concerns that the fund industry’s current climate investing practices may not be delivering desired outcomes due to the mounting threat of portfolio greenwashing. A recent study by the EDHEC Business School found that market capitalisation is the primary factor determining portfolio weights, accounting for up to 88% of the weights – while climate considerations play second fiddle at best. “To favour the fight against portfolio greenwashing, we suggest that when climate considerations represent less than 50% of the determinants of the weight of the stocks in a portfolio that is presented as promoting the transition to a low carbon or net-zero economy, then this portfolio should be considered to be at a significant risk of greenwashing and should not be permitted to claim that it is climate-friendly or aligned with net-zero ambitions,” says the study. (...)"