Just as retail traders were able to power seemingly deadbeat companies to dizzying highs this year from GameStop to AMC Entertainment Holdings, prices of stocks bought by ESG investors will naturally rise – even without any fundamental justification. To the researcher, the point is that flows have so far driven industry performance – more than commonly acknowledged.
Even if there is something to Mr Van der Beck's analysis, profound global changes will still boost ESG shares far into the future. Proponents argue there's evidence an ESG framework can help pick winning stocks by seizing on the broader fight against climate change and social inequities – making Tesla more attractive than Exxon Mobil, for example. It's the latest contribution to the raging debate on the "have your cake and eat it" pitch driving the industry, which as of last year has amassed a whopping €30trn in assets. "If however, ESG inflows unexpectedly revert, the realised future return may be strongly negative." "Under the absence of flow-driven price pressure, the aggregate ESG industry would have strongly underperformed the market from 2016 to 2021," Philippe van der Beck said in the ‘Flow-Driven ESG Returns’ paper published this month. In fact, ESG bets would have backfired spectacularly without this influx of cash – leaving Wall Street portfolios at the mercy of volatile capital flows. The fundamentals of socially responsible investing have played no role in driving these returns. Research from the Swiss Finance Institute argues stocks highly rated on environmental, social and governance metrics have outperformed in recent years all thanks to the trillions of dollars flooding the sector. You can also join the community of followers over on the game's official Facebook page to stay updated on all the latest developments.The doing-well-by-doing-good conviction driving environment, social and governance (ESG) oriented investors around the world is nothing more than an illusion of their own making, according to a controversial new study. It's a free-to-play game with in-app purchases, available to download on the iOS App Store and on the Google Play Store for Android devices. If you'd like to get in on the action before all the festivities begin, you can download Illusion Connect and get a headstart on the first anniversary celebrations. There are six factions with unique characteristics, and players will have to harness the power of Lenses to keep humanity safe from malevolent creatures known as Nightmares in this tactical RPG. If you're not familiar with the game, Illusion Connect takes players on an immersive narrative that dives deep into the fight between the real world and the Dream World.
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