Is Wall Street endorsing, or even dictating, a moral standard in the capital markets? Implications of the popularity of ESG (environmental, social, and governance) mutual funds and ETFs

Presenter Information

John Gonas, Belmont UniversityFollow

Location

Bunch Library Multimedia Hall

Start Date

3-4-2019 3:05 PM

End Date

3-4-2019 3:20 PM

Publication Date

Spring 4-3-2019

Description

As we continue to witness a massive transfer of wealth in the U.S., investment banks are aggressively moving to meet client demands by creating “ESG Funds” that are tied to in-house or third-party rankings of corporate social responsibility (CSR) and sustainability. Such rankings are typically based on a proprietary due diligence process that generates a quantitative screening mechanism, allowing public and private companies to achieve a relative ESG score within a sector and/or industry. ESG metrics enable investment advisory firms to create broad-based or “targeted” funds that focus on general or specific social/environmental/governance screens, such as a company’s level of carbon emissions relative to its industry peers. As investors are allocating more capital to ESG funds, we ask “How has this phenomenon evolved and motivated firms within these funds to change behavior, seek or strengthen ESG scores, and ultimately signal compliance to their investors’ expectations of an economic and/or social return?”

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Apr 3rd, 3:05 PM Apr 3rd, 3:20 PM

Is Wall Street endorsing, or even dictating, a moral standard in the capital markets? Implications of the popularity of ESG (environmental, social, and governance) mutual funds and ETFs

Bunch Library Multimedia Hall

As we continue to witness a massive transfer of wealth in the U.S., investment banks are aggressively moving to meet client demands by creating “ESG Funds” that are tied to in-house or third-party rankings of corporate social responsibility (CSR) and sustainability. Such rankings are typically based on a proprietary due diligence process that generates a quantitative screening mechanism, allowing public and private companies to achieve a relative ESG score within a sector and/or industry. ESG metrics enable investment advisory firms to create broad-based or “targeted” funds that focus on general or specific social/environmental/governance screens, such as a company’s level of carbon emissions relative to its industry peers. As investors are allocating more capital to ESG funds, we ask “How has this phenomenon evolved and motivated firms within these funds to change behavior, seek or strengthen ESG scores, and ultimately signal compliance to their investors’ expectations of an economic and/or social return?”