Can Good Corporate Citizenship Be Measured?
Even though the companies that rated the best on E. S.G.
issues performed better, on average, than others, the study said
that “this performance was not consistent, and was very similar to the performance of large versus small companies.”
Indeed, the authors found that in certain industries, like health care, technology and consumer staples, companies that scored highly on E. S.G.
metrics actually underperformed their peers.
A survey of investors last year by RBC Global Asset Management found
that less than 30 percent of investors believed they could outperform the market by investing in companies that score highly on E. S.G.
“It is striking to see that asset owners remain doubtful of E. S.G.’s efficacy even as so much capital pours into E.
S.G.-related investments,” Ben Yeoh, a senior portfolio manager at RBC Global Asset Management, said at the time
metrics “have been a better signal of future earnings volatility than any other measure we have found,” with companies that rank highest in E. S.G.
tending to rank lowest in volatility (and vice versa), the study said.
The good news version: Investors who look at environmental, social
and governance metrics are less likely to buy shares in companies with volatile stocks.