The main challenge for the adoption of ESG investing remains the low quality of data available and the hodgepodge of criteria and dimensions investors try to cover under the banner of ESG.
Totally agree on the points about low data quality and noisy ESG data. In my short experience writing about this very topic, I have not found evidence of ESG return enhancement as there is no free lunch.
Rather, the more thoughtful investors seem to use quantification as a tool to measure the price to pay (in terms of alpha) to reach their sustainable targets. Still a lot to learn in this field so thank you for shedding light on this!
A fair analysis, as others have said before - ESG investing is largely “Greenwashing”.
I have tried to find true ESG funds - those that have long term holdings in companies which will make a difference. A search on ‘climate change’ in Sharepad revealed 7 UK funds, none of which meets my test. The only one I could find is GMO Climate Change Investment, which offers a GBP£ class but is not available in the UK.
Totally agree on the points about low data quality and noisy ESG data. In my short experience writing about this very topic, I have not found evidence of ESG return enhancement as there is no free lunch.
Rather, the more thoughtful investors seem to use quantification as a tool to measure the price to pay (in terms of alpha) to reach their sustainable targets. Still a lot to learn in this field so thank you for shedding light on this!
A fair analysis, as others have said before - ESG investing is largely “Greenwashing”.
I have tried to find true ESG funds - those that have long term holdings in companies which will make a difference. A search on ‘climate change’ in Sharepad revealed 7 UK funds, none of which meets my test. The only one I could find is GMO Climate Change Investment, which offers a GBP£ class but is not available in the UK.
Does the knowledgeable Mr K know of any?