The effect on the performance of an investment portfolio of applying sustainability-based criteria to select stocks remains a topic of intense debate. Before assessing the impact, we note that environmental, social and governance criteria can be used to achieve different goals. Thus, outcomes vary depending on the sets of ESG criteria used for investment portfolios.
The results of the study we are presenting in this article show that outcomes do indeed differ depending on why and how sustainability criteria are chosen. We believe that being clear on this critical point adds to an understanding of sustainability-related investing.
We also note that while this study reviews three approaches in their own right, in practice various methodologies are applied in combination in a single portfolio. They are often complementary to the fundamental financial data shaping investment decisions.
