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Environmental, social, and governance (ESG) data: Can it enhance returns and reduce risks?

White Paper by Dr. Andreas G. F. Hoepner


This white paper introduces the concept of ESG investing and highlights its opportunities to enhance returns and manage risks. ESG investing refers to a process of integrating envi­ronmental, social, and corporate governance (ESG) data into investment decision-making.

This white paper offers a strong outlook on the field of ESG investment and recommends its deeper consid­eration by any institutional or private asset owner or financial services institution. It should be common sense to consider cultural shifts in society when making investment decisions. The fact that standard professional finance degree programs have not really taught their students how to evaluate this information makes ESG investment all the more appealing, as it substantially reduces the competition for ESG investors. Hence, this type of investment is a low-competition, longer-term strategy that can enhance investment returns and reduce risks by capitalising on common sense insights into the busi­ness relevance of specific ESG factors.