Cambridge Judge Business School, which is supported by Invesco, has produced a study, to contrast and evaluate two of the most popular responsible investing strategies employed at present: negative screening and active engagement.
As a backdrop, the authors consider the challenges faced by the University of Cambridge, which mirrors those experienced by institutional investors worldwide. Specifically, they make use of issues raised at a recent “Divest or Engage?” conference held at the university.
The authors discuss emerging academic evidence from recent (unpublished) papers to provide an up-to-date perspective. They describe the challenges in excluding undesirable assets from investment portfolios and present evidence on the effectiveness of engaging with investee companies. The strategies of divestment and engagement are often employed as complements to each other, and this can be advantageous.
The authors also caution that investors need to be aware of the disquieting evidence that Environmental, social and governance (ESG) metrics differ considerably across ratings services, and the choice of data provider can have a fundamental impact on the ESG credentials of institutional portfolios.
This edition of Risk & Reward explores a novel NLP-driven controversy screening tool that complements traditional ESG assessments by effectively identifying financially material controversies through abnormal news flow indicator.
Our 2023 Stewardship Report highlights our commitment to sustainable growth and responsible asset management, reinforcing our mission to prioritise long-term value.
Subtle differences in factor definitions can profoundly impact performance, and a crucial decision is whether to rely on a single or multiple factor signals. We present an approach that may help investors improve factor premiums by diversifying across signals and removing exposures to unrewarded risks.
