Displaying items by tag: ESG scoring
Is ESG Cratering?
With apparent eroding client interest, ESGs might be losing some of their bang, according to thinkadvisor.com. In the past several months, 31% of advisors reported taking questions about ESG or socially responsible investing from clients. That’s down from 39% who indicated as much last year and in 2020.
Thirty four percent of advisors were found to tap or recommend these strategies to clients this year, according to the survey. While that’s an uptick of 2 percentage points from 2021, it receded from a high of 38% in 2020.
Investmentnews.com reported in June that, in recent years, while a burgeoning percentage of financial advisors folded ESG investments options into their business, more now indicated they intend shore back on suggesting such investments, according to a survey.
While financial advisor use or recommendation of environmental, social and governance or ESG investing strategies have moved consistently along over the past four years, according to prnewswire.com. However, during the next 12 months, it could slip in use, according to the 2022 Trends in Investing Survey, conducted by the Journal of Financial Planning and the Financial Planning Association, as provided to prnewswire.com by the Financial Planning Association.
These ESG Strategies Won’t Work
MSCI Inc. has come out firing against the hedge funds' strategy in dealing with ESG. Many prominent hedge funds, like AQR, have not only invested in ESG but are shorting poor ESG scoring companies in an attempt to raise the cost of capital. MSCI VP of ESG, Rumi Mahmood, says this is not an effective ESG strategy because it decreases transparency and doesn’t align corporate and investor interests. On top of that, he believes shorting poor ESG metrics won’t affect the cost of capital for these companies. MSCI finds that engagement over time is the alternative and better pathway to influence a company's behavior.
Finsum: There is not enough evidence out there as to the effect of short selling on capital formation, however, companies shorting traditional energy have taken a bath.
Emerging Markets Key to ESG Outperformance
Fund managers are turning to an unusual place to lead the charge in ESG…see the full story on our partner Magnifi’s site