Sustainable Investment – Exploring the Linkage between Alpha, ESG, and SDG’s

Geert Bekaert, Richard V Rothenberg, Miquel Noguer

2022 | Academic | Impact Investing, Portfolio Construction, Risk & Performance, Sustainable Investing

Because companies with good ESG performance may enjoy a valuation premium, ESG investing has been thought to create a potential conflict for asset owners who have a fiduciary duty not to sacrifice long-term return opportunities. In this paper we dispel that view. We investigate the SDG footprint of an active ESG portfolio using algorithms and alternative data. We show it is feasible for an asset owner to both uphold his/her fiduciary duty and have a positive impact on achieving the SDGs...