There is an old joke that goes roughly like this: A Good Samaritan sees a man searching for his house keys under a streetlight. She offers to help and asks whether the man is sure that he lost his keys in this particular spot. The man replies, no, that he lost them in the dark alley across the street. Why then is he looking here, under this particular streetlight, she asks. He replies: This is where the light is.
Sometimes it can be hard to find evidence to precisely answer the most fundamental questions. It’s not quite as stark as in the old joke, but there is a choice whether to make rough and direct guesses about an important debate, or instead find precise but indirect evidence. When it comes to understanding the impact of environmental, social, and governance (ESG) considerations on capital markets, it is hard to answer the fundamental questions: What impact have they had so far on market prices? And what sort of returns might these mandates deliver in the future?
