Cover Story
[ ESG ]
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Anthony Luzio finds out why a focus on ESG practices
is no longer the preserve of ethical funds
The only way
is ethics
B
y far the largest deterrent
to investing in funds that
prioritise a focus on ESG –
environmental, social and
governance – issues is the belief that
the warm glow that comes with acting
in a principled manner comes at the
expense of higher returns. In March
2017, then chief executive of WPP
Sir Martin Sorrell made headlines
when he said: “Corporate structures
that seem to offend customary good
corporate governance may deliver
better long-term results.” And while
his statement drew criticism from the
press, there was a nagging feeling that
he was just saying what many people
felt was true but were too scared to
say out loud.
Yet the numbers tell a different
story. Data from FE Analytics shows
the FTSE4Good UK, Europe and US
FE TRUSTNET
indices have beaten their mainstream
counterparts over the past decade,
with Japan the only major developed
market where the opposite is true.