Does investing sustainably mean giving up on potential returns? Investors rightly question whether a preference for sustainable, socially-responsible investing means giving up on opportunities for portfolio performance. Some researchers have claimed in the past that excluding so-called sin stocks (e.g. companies involved in alcohol, tobacco, gambling, etc.) from portfolios has exactly this effect.
Today however, there is substantive research challenging this perception. The latest findings by the Lyxor Dauphine Research Academy conclusively answer three key questions.
- Does an investment in ESG degrade a portfolio’s performance?
- What kinds of biases does a positive ESG screening strategy introduce?
- Are there some factors that work better than others?
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