Meta analysis of 2000+ studies reveals positive and durable impact on company prices for ESG integration

Research suggests splitting of ESG factors for optimal impact.

A new meta analysis of more than 2000 empirical studies published since 1970 reveals that the data demonstrate a positive and durable overall impact for ESG integration in boosting the financial performance of companies.
The research, published jointly by Deutsche Asset & Wealth Management and Hamburg University, titled “ESG & Corporate Financial Performance (CFP): Mapping the Global Landscape”, found that the majority of the 2000+ cases studied demonstrated that the addition of ESG into investment had a positive impact on CFP and that this effect remains stable over time.
Within the E, S and G criteria, the research finds that governance issues such as reputational damage are the most popular and drive ESG momentum, as demonstrated by the recent Volkswagen emissions scandal.
The report on the research finds that for optimum investment results, the E, S and G criteria should be looked at separately for investment, because, it says, a general classification distorts or hides certain factors lowering the overall potential influence of ESG factors.The research has been given prominent backing by the PRI. Fiona Reynolds, Managing Director, said it was the largest study of its kind to date and that it was an “important contribution to mainstream responsible investing”.
It finds that the link between ESG and CFP varies across regions and asset classes. ESG outperformance opportunities are higher in North America and Emerging Markets, it says, while within asset classes, bonds and green real estate are where the ESGCFP performance links are the strongest.
The research was conduced by Gunnar Friede, Senior Fund Manager and Director with Deutsche Asset & Wealth Management, Prof. Dr. Alexander Bassen, Professor at the University of Hamburg, Prof. Dr. Timo Busch, Professor at the university of Hamburg, and Michael Lewis, Head of Sustainable Finance Research at Deutsche Bank. The authors say: “ESG investing is suitable for all kinds of investors a way to fulfil their fiduciary duties and to better align investors’ interests with the broader objectives of society”.
Link to research