It’s Time to Make ESG a Part of Portfolio Theory

Here’s just a small sampling of the ESG-related topics that have landed in the inbox around here recently:
“A study released today by Calvert Investments shows a positive material impact of ESG factors on long-term equity performance.”  
“Institutional Shareholder Services Appoints Georgina Marshall as New Head of Global Research.” (She has led ISS’s ESG efforts.)
From MSCI  Inc.: “Webinar: Can ESG Add Alpha?”
“Euronext and Vigeo create a new ESG index dedicated to companies from emerging market countries.” 
“Corporate Sustainability: First Evidence on Materiality”
Lest you think these all are examples of book-talking from firms with a horse in the ESG race, note that the last one is a study by Harvard Business School professors Mozaffar Khan, George Serafeim  and Aaron Yoon. They conclude:
Using both calendar-time portfolio stock return regressions and cross-sectional return prediction regressions we find that firms with good ratings on material sustainability issues significantly outperform firms with poor ratings on these issues.

via Giving Hippies Key to Portfolio Is Not Such a Bad Idea After All – Bloomberg Business.

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