Below is an excerpt from ISS ESG’s thought leadership paper “Outperformance Through The Use of the ISS ESG Prime Standard” The full paper is available for download from the Institutional Shareholder Services (ISS) online library.
ISS ESG releases the latest in a multi-year series of analyses demonstrating the financial materiality of the Prime rating for portfolio returns.
In equity investments, what are the performance implications of using the ISS ESG Corporate Rating, compared to conventional investment approaches? Since 2012 ISS ESG has teamed up with leading German investment research house Deutsche Performancemessungs-Gesellschaft für Wertpapierportfolios mbH (DPG) to answer this question.
In a solid continuation of previous years´ results, this analysis shows that taking sustainability criteria into account does not necessarily entail lower returns or a higher risk. In fact, by taking such criteria into account, investors can obtain a double dividend: generating returns that are at the very least in line with the market — and in this case even higher — while at the same time achieving social, environmental, or ethical goals.
There is a wealth of evidence supporting the notion that responsible investors needn’t sacrifice returns through the process of ESG integration. This paper not only reiterates this conclusion – it also takes the next step and identifies practical tools that investors can use to put their principles into practice.
Hernando Cortina, ISS ESG
Anthony Campagna, ISS ESG