Specific environmental, social and corporate governance factors can have a positive impact on portfolio returns, according to a growing body of academic research. In its new report, Shedding Light on Responsible Investment: Approaches, Returns and Impacts, Mercer summarises and comments on sixteen academic studies— the majority of which show a positive relationship between ESG factors and companies’ financial performance, four of which show a neutral relationship and two which show a neutral to negative relationship. “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,” said Tim Gardener, global chief investment officer for Mercer’s investment consulting business. The research reviewed in the report include 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 encompass a variety of geographies, both in country of origin and in markets considered. More…