Can sustainable investments achieve performance objectives?
Addressing key material factors that have often not been considered investment decisions can help investors maximize a portfolio’s risk and return profile. In addition to addressing constituent concerns, incorporating material environmental, social, and governance factors into an investment decision value chain can enhance long-term returns, decrease risk by providing downside protection, and deliver portfolio benefits such as diversification and reduced volatility.
Reports and Resource
- Does Sustainability Generate Better Financial Performance? Review, Meta-Analysis, and Propositions | 2023 This research surveyed 1,141 primary peer-reviewed papers and 27 meta-reviews published between 2015 and 2020 on to examine ESG financial performance. The collective sample suggest that the financial performance of ESG investing has on average been indistinguishable from conventional investing
- ESG and Financial Performance: Uncovering the Relationship by Aggregating Evidence from 1,000 Plus Studies Published between 2015 – 2020, NYU Stern Center for Sustainable Business, partnered with Rockefeller Asset Management to provide a Meta-studies examining the relationship between environmental, social, and governance (ESG) and financial performance have a decades-long history
- Investing in Our Mission: A Five-Year Case Study of Fossil Fuel Divestment at the Rockefeller Brothers Fund — A Case Study of Fossil Fuel Divestment at the Rockefeller Brothers Fund, May 2020
- Financial Performance of Sustainable Investing: The State of the Field and Case Studies for Endowments, Intentional Endowments Network, February 2020 - provides a collection of real-world cases of college and university endowments implementing sustainable investment strategies and meeting their financial performance targets.
- Where ESG Fails, Intitutional Investor, A case study to show that responsible investing deliver alpha, October 2019
- The Business Case for ESG, Intentional Endowments Network, March 2016 - defines ESG investing is, describes how ESG investing and analysis can be approached, and addresses how ESG investing strategies perform financially.
- Seeing SRI in Context, Steffon M. Gray, assistant director, research and policy analysis, NACUBO, March 2019. Compares the performance of 2017 NACUBO-Commonfund survey participants who integrate responsible investing practices with those who don't and finds no significant difference except among the largest endowment where those with responsible investing practices outperformed those without.
- Paper on financial performance of ESG integration in US investing, Principles for Responsible Investment, February 2018 —Summarizes the findings on ESG materiality in three empirical studies
- Sustainable Investing and Bond Returns, Barclays, October 2016 — Examines the relationship between ESG investing and performance in the US corporate bond markets and finds that the incorporation of ESG factors into the analysis of bonds had a small but consistent performance benefit.
- Corporate Sustainability: First Evidence on Materiality (pdf), Mozaffar Khan, George Serafeim, Aaron Yoon, March 9, 2015 — Found that firms with good ratings on material sustainability issues significantly outperform firms the poor ratings on these issues.
- The Impact of Corporate Sustainability on Organizational Processes and Performance (pdf) | Robert G. Eccles, Ioannis Ioannou, George Serafeim, Harvard Business School, July 2013 — 18-year study (1993-2011) showing that 90 companies with strong sustainability policies outperformed a similar group of 90 companies with low sustainability standards, with a 4.8 percent higher annual above-market average return.
- Allocating Capital for Long-Term Returns, Generation Foundation, May 2015 - Makes the investment case for sustainable capitalism
- Excerpt from GMO The Race for Our Lives — An analysis of the performance impact of divesting from various S&P 500 sectors.
- Financial performance implications of divesting from U.S. fossil fuel stocks — IEN online resource, January 2015 - compares the performance of the Russell 3000 Index to an optimized portfolio of Russell 3000 Index stocks without consumable fuel stocks over rolling 3 year periods spanning 25 years from 1988-2013.
- Video: How a Sustainable Investing Lens leads to Better Stock Selection — Keynote Address by David Blood, Co-Founder & Senior Partner, Generation Investment Management at the 2016 Intentionally Designed Endowment Forum
David Blood discussing sustainability and stock selection at 2016 IEN Forum