ESG funds often end up with a lower oil stock allocation than conventional funds, but ESG approaches vary in how they do it and how far they go. “Best-in-class” often applies a relative ESG threshold, so it might include oil stocks considered to be relatively good ESG performers for that sector and exclude (or “underweight”) lower-rated oil stocks. “We currently see incredibly inconsistent definitions of good and bad ESG companies,” concluded researchers at Research Affiliates, in connection with two 2020 ESG studies. In the future, the sheer pervasive influence of ESG investing could make it harder for ESG funds to gain superior insights over traditional funds. Eyeing ESG prospectsWith so much momentum behind it, expect that the boom in ESG investing will continue for some time.

Source: thestar November 15, 2021 17:00 UTC