The majority of studies into the impact of environmental, social and governance (ESG) factors on investments have concluded that integrating these considerations boosts returns, according to a report.
The research, conducted by Deutsche Asset Management and the University of Hamburg, looked at data from over 2,250 individual studies into ESG since 1970, making it the largest study "of its kind".
The report, called ESG & Corporate Financial Performance: Mapping The Global Landscape, found that 62.6% of studies showed a positive correlation between ESG and returns, while only 10% found a negative correlation.
It also concluded that "it's more beneficial to apply E, S and G factors independently", with environmental factors having the biggest positive impact on returns.
When ESG factors were applied independently, environmental factors showed positive returns in 58.7% of the studies, compared to 4.3% where it showed negative returns. This represents a greater net positive figure than social or governance factors.
"The study is an important contribution to mainstream responsible investing and providing a more definitive answer on ESG and corporate financial performance," said Fiona Reynolds, managing director of Principals of Responsible Investment, in a foreword to the white paper.
It also found there was a larger positive correlation between ESG factors and financial performance in bonds and real estate assets compared with equity and mutual funds.
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