Publications
Publications
- Third Quarter 2018
- Financial Analysts Journal
Why and How Investors Use ESG Information: Evidence from a Global Survey
By: Amir Amel-Zadeh and George Serafeim
Abstract
Using survey data from a sample of senior investment professionals from mainstream (i.e., not SRI funds) investment organizations, we provide insights into why and how investors use reported environmental, social, and governance (ESG) information. Relevance to investment performance is the most frequent motivation for use of ESG data followed by client demand and product strategy, bringing change in companies as well as ethical considerations. Important impediments to the use of ESG information are the lack of reporting standards and as a result, lack of comparability, reliability, quantifiability, and timeliness. Among the different ESG investment styles, negative screening is perceived as the least investment beneficial while full integration into stock valuation and engagement are considered more beneficial, but they are all practiced with equal frequency. Current practices of different ESG styles, especially screening, are driven by product and ethical considerations. In contrast, integration is driven by relevance to investment performance. Future practices of ESG styles are driven by relevance to investment performance, bringing change in companies and concerns about data reliability.
Keywords
ESG; ESG (Environmental, Social, Governance) Performance; Sustainability; Investment Management; Investment Strategy; Metrics; Standard Setting; Accounting Standards; Finance; Investment; Information; Environmental Sustainability; Governance; Performance Effectiveness; Strategy
Citation
Amel-Zadeh, Amir, and George Serafeim. "Why and How Investors Use ESG Information: Evidence from a Global Survey." Financial Analysts Journal 74, no. 3 (Third Quarter 2018): 87–103.