“The above findings should not lead to questioning whether 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 — ESG strategies should be considered for the unique benefits they can provide, such as hedging climate or litigation risk, aligning investments with norms and making a positive impact for society.
In addition, ESG investors get an added benefit by employing strategies that tilt toward factors with higher expected returns — a strategy employed by the sustainable investment funds of Dimensional.”
[COMMENTARY] Two particularly interesting studies are reviewed here. What has always concerned me in most ESG portfolios is the overweight of tech and financials in them. Now, if in the years ahead we are to fulfill our renewable energy ambitions, massive increases in mining for lithium, copper, cobalt, silver, etc., will be needed. Will ESG investors and funds turn to miners that mine in a ‘most’ sustainable way?
The Non-Performance Benefits of ESG Investing, by Larry Swedroe, January 3, 3022, Advisor Perspectives, USA.