“There’s more information than ever on ESG investing, but it isn’t helping,” reads James Mackintosh’s recent opinion piece in The Wall Street Journal. He argues that the costs of integrating environmental, social, and governance information into investing outweighs the benefits.
Mackintosh claims that ESG integration is not proven to help investors consistently beat the market or reduce portfolio volatility over the long term, or to deliver performance over and above that of strategies that only integrate conventional financial information.
In my opinion, that’s broadly true. Claims that ESG integration could consistently achieve these outcomes over the long term were always wide of the mark. To beat the market, an investor must do things most of the rest of the market isn’t doing. As the use of ESG information becomes more widespread, its potential to drive…
