“Our results from studying actively managed mutual funds support the hypothesis that ESG information is financially material, but complex. Specialized fund managers can incorporate such information into their investment process to the benefit of their investors, especially when investing in stocks with a high level of disagreement in ESG ratings. Thus, regardless of an investor’s nonpecuniary beliefs, ESG information should not be ignored.”
[COMMENTARY] This deep study into the link between the materiality of ESG and financial performance makes clear a direct link exists! The criticism that ESG is mandating a left-wing social-government policy conspiracy, totally misunderstands what ESG is. Furthermore, behind these ‘woke’ accusations are frequently fossil fuel interests and investors, combined with political posturing.
The Complex Materiality of ESG Ratings: Evidence from Actively Managed ESG Funds, by Martijn Cremers, Timothy B. Riley, and Rafael Zambrana, February 14, 2023, Harvard Law School Forum on Corporate Governance, USA.