The Conventional Wisdom On ESG Is Wrong. Now What?

Both interest in and backlash against ESG are at all-time high. Recently, leading asset managers and academics alike are making the case that contrary to being a political act, ESG integration, or incorporating environmental, social, and governance factors into investment and ownership decisions, is no different from other investment approaches that create long-term financial and social value.

Investors globally are parsing through BlackRock
BLK
CEO Larry Fink’s comments at Aspen Ideas about no longer using the term “ESG” because it is being politically “weaponized,” and institutional allocators have been circulating recent Pitchbook research questioning whether ESG investors were underperforming. As they digest these developments, institutional investors would also benefit from reviewing London Business School Professor Alex Edmans’s research on “Applying Economics—Not Gut Feel—To ESG.”