RSPE - Materiality Matters: The ESG Factors That Count
2025-05-22 05:56:00 ET
Summary
- As ESG factors help contribute to—or detract from—security returns, it makes sense for active investors to integrate them into security selection.
- Factor attribution using historical returns can reveal how ESG factors have contributed to investment returns in the past, whether for a sector or an entire investment universe, in equities or in bonds.
- Understanding the effect of ESG factors on performance is most valuable in the context of broader research into how well a company is managed.
By Patrick O'Connell, CFA, John Huang, CFA and Erin Bigley, CFA
Materiality Matters: The ESG Factors That CountThe materiality of ESG factors differs across sectors and markets. Investors need to understand how.