Connect with us

Media Mention

[BNN Bloomberg] Larry Berman: I’m Bullish on ESG Investing, But Are ESG Funds Getting a Failing Grade?

Andrew King

Published

on

Apr 18, 2022

BNN Bloomberg recently published insight featuring Andrew King, Professor of Strategy and Innovation, discussing a recent study investigating the performance of ESG (environmental, social, and governance-focused) investment funds.

After interviewing more than a dozen investment professionals to investigate their claims that a focus on ESG produces higher profits, signals higher stock returns, lowers capital costs, and benefits from investment flow, Andrew and his coauthor concluded that,

“The logic and evidence for assurances of ESG-driven alpha are lacking. Indeed, it is our best guess that flows of money into ESG funds represent a marketing-induced trend that will neither benefit the planet nor provide investors with higher returns.”

Over the past decade, ESG funds have had mixed results, generally failing to outpace the broader market. However, ESG managers and advocates note that the strategy of these funds aims to deliver long-term value, and that all investment styles have stretches of underperformance.

Professor Andrew A. King is a leading authority on environmental performance and innovation. His research established whether and when firms can find ways to profitably reduce their impact on the environment. His empirical tests of the efficacy of industry self-regulation helped change both private and public policy. His research now explores open source innovation and knowledge sharing. Andy was an early advocate of a scholarship on what is now called “sustainability”, and his findings and methods have influenced scholars in many disciplines. With students and colleagues, he helped found some of the most important research institutions in the field, culminating in the Alliance for Research on Corporate Sustainability. Andy has been a Marvin Bower Fellow at the Harvard Business School, an Aspen Institute Faculty Pioneer, and an Academy of Management Journal Best Paper Award winner His thesis won the Massachusetts Institute of Technology’s Zannetos Prize. Andy holds a BA from Brown University, an MS from the University of California, Berkeley, and a PhD from the Massachusetts Institute of Technology.