René Lavanchi reviews some of the issues and debates that keep making ESG and infrastructure investment a good research topic: we don’t know enough about it.
“Anything that’s reported is reported better by large companies,” says Frédéric Blanc-Brude, director of EDHECinfra. “They tend to report things that are very heterogeneous, and the standards that exist don’t force them to report metrics that are directly comparable… in terms of collecting information and making robust conclusions, it’s not enough.”
“.. Blanc-Brude says that return on assets is a valid metric and is used in comparable studies. He also argues that if, as he expects, better ESG risk management leads to de-risking and therefore a capital gain, this should be a one-off event, not a continuous process. After that, he posits, returns should be permanently lower on the basis of lower risk, assuming that an ESG-focused investor is able to lower risk in the first place.”
Read the story here.