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Environmental, Social and Governance investing: Does rating matter?
Author(s) -
Pacelli Vincenzo,
Pampurini Francesca,
Quaranta Anna Grazia
Publication year - 2023
Publication title -
business strategy and the environment
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.123
H-Index - 105
eISSN - 1099-0836
pISSN - 0964-4733
DOI - 10.1002/bse.3116
Subject(s) - corporate governance , portfolio , business , investment strategy , risk–return spectrum , investment (military) , socially responsible investing , asset (computer security) , investment performance , capital asset pricing model , alternative investment , finance , economics , return on investment , microeconomics , production (economics) , computer security , politics , market liquidity , political science , computer science , law , transaction cost
In the last decade, the demand for sustainable and social investments has improved. The mutual funds industry has responded to market needs by offering a number of investment products focused on Environmental, Social and Governance (ESG) companies. The aim of this article is to understand if an ESG score can actually be considered a valid criterion that portfolio managers could adopt, along with traditional risk–return optimisation, in selecting asset portfolios. The paper analyses the link between the performance and the ESG score of different sectoral portfolios (one for each sector of the Global Industry Classification Standard), entirely composed of ESG assets, in the search for a clear and strong positive correlation that could suggest an overall advantage to focus on an ex ante choice of assets with high ESG scores.