ESG has clear positive affect on portfolio returns

A report from the consultant, that summarised the findings from 16 academic studies, found 10 showed a positive relationship between ESG factors and companies' financial performance.

The report - Shedding Light on Responsible Investment: Approaches, Returns and Impacts - also revealed four studies showed a neutral relationship and two showed a neutral to negative relationship.

Mercer global chief investment officer Tim Gardener said: "The idea that responsible investment does not have to come at a cost to performance is becoming well established in the institutional investment industry.

"In fact, the Shedding Light report further builds the already strong case that considering ESG factors can add real and measurable value to an investment portfolio."

The research reviewed in the report included influential, peer-reviewed studies which apply traditional finance theory to ESG factors and span a variety of research methods, regional samples and investment approaches - such as screening, integration, and shareholder engagement.

The studies also encompassed a variety of geographies, both in country of origin and in markets considered.