Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

12485

ESG investments provide breath of fresh air for portfolios, says Hoepner

RELATED TOPICS​

Responsible investments, which include the areas of environment, social and corporate governance in investment decision-making, provide a breath of fresh air for the portfolios of institutional and private investors alike, says Andreas Hoepner in the latest White Paper for Global Financial Institute.

“Responsible investment offers opportunities to generate higher returns with lower levels of investment risk,” says Hoepner, a lecturer at the University of St Andrews in Scotland, where he is also deputy director of the Institute for Responsible Banking and Finance. 
 
ESG criteria refer to issues such as climate change, environmental pollution, biological diversity or water scarcity just as much as employer relationships, social commitment, human rights, protection of minorities or avoidance of harmful products such as tobacco. In terms of corporate governance, this addresses the areas of investor protection or limiting the powers of company directors.
 
Hoepner highlights the fact that the total volume of responsible investments has increased almost ten-fold over the past ten years. In his view, the key driver of this has been the demand from investors to focus more closely on ESG criteria. At the same time, he established that these subjects are still afforded too little consideration by many analysts and investment managers. Consequently, sustainably oriented investment managers enjoy a tangible information advantage over their competitors.
 
In his study Hoepner provides empirical evidence that responsibly oriented investments in many industries offer higher return potential than investments which disregard ESG concerns. He also notes that responsible investments tend to carry lower investment risk. Researchers at the Universities of Maastricht and Reading have demonstrated that companies which enjoy a higher ESG rating, have higher credit ratings and lower cost of capital on average. Indeed, Hoepner detects a lower downside risk in responsibly oriented portfolios, even if they are less diversified.
 
Nicolas Huber, who coordinates ESG interests for Deutsche Asset & Wealth Management and who was involved in the study, says: “Hoepner’s research shows the ESG concept to be both successful and effective. It demonstrates the suitability of responsible investment as a long-term investment strategy, which should be observed in equal measure by both institutional and private investors.”

Latest News

EFAMA has commented on today’s vote by the European Parliament in favour of a new..
Morgan Stanley Investment Management (MSIM) has announced the launch of the MS INVF Systematic Liquid..
Confidence in the continuing strength of bitcoin and Ethereum is driving wider interest in altcoins..

Related Articles

Juan Nozal, Mapfre Asset Management
Juan Nozal, Fixed Income Portfolio Manager at MAPFRE Asset Management, talks about the outlook for fixed income assets over 2024, in what he predicts will be an outstanding year for this asset class...
Juan Nozal, Fixed Income Portfolio Manager at MAPFRE Asset Management, talks about the outlook for fixed income assets over 2024,..
n response to the increased attention to climate change risk, institutional investors, asset managers, and asset owners in the US are committed to implementing a variety of measures to address climate change and reach their net-zero goals, according to Cerulli Associates...
n response to the increased attention to climate change risk, institutional investors, asset managers, and asset owners in the US..
Lord Hollick, House of Lords
A House of Lords committee has raised “significant concerns” over the role of UK regulators, their ability to operate with genuine independence from government and how they are held to account...
A House of Lords committee has raised “significant concerns” over the role of UK regulators, their ability to operate with..
Rob Edwards, Morningstar
The complexities of assessing performance from responsible investment strategies have been laid bare after Morningstar’s ESG indices delivered a mixed bag in 2023...
The complexities of assessing performance from responsible investment strategies have been laid bare after Morningstar’s ESG indices delivered a mixed..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by