Inclusion or Invisibility
February 3, 2016
SBCC Summit Report 2016
July 3, 2016ESG: Sustainable investing and bond returns
Does the incorporation of environmental, social and governance (ESG) criteria in the investment process improve the financial performance of a bond portfolio or hurt it?
Barclays Quantitative Portfolio Strategy Research team recently investigated the relationship between ESG investing and performance in the US corporate bond markets. The highlights of the findings were:
- Introducing ESG factors into the investment process resulted in a small but steady performance benefit. No evidence of a negative impact was found.
- Over the historical period of the study, the performance advantage of portfolios with an ESG tilt was not caused by high-ESG bonds becoming more expensive than their low-ESG peers, driven up by excess demand. Thus, we found no evidence to suggest that including high-ESG bonds would cause future underperformance as the prices of these bonds revert back to the prices of their peers.
- Of the three scores – E, S and G – the governance score had the strongest impact on performance. Bonds with a high G score also suffered credit downgrades less often than those with a low G score.
SIE SOCIETY
The SIE Society is the central hub for Social Impact Entertainment, CSR, and SBCC companies, organizations, institutions, and professionals.
The mission of the SIE Society is to bring together the Social Impact Entertainment community across all media platforms in order to amplify voices, expand resources and opportunities, and involve the next generation of storytellers. We educate, connect, and equip members and newcomers on what is SIE to begin with, how to implement it on your own projects, and how to find allies along the way while fostering diversity, inclusion, and change both in front of and behind the camera.
