Alternative Data News and Insight

The lack of industry consensus on whether ESG integration compromises on returns stems from the lack of uniformity across ESG ratings methodologies. In short - different ESG datasets result in differing financial outcomes. In this report, we summarize the academic studies, investment strategies and datasets that have been empirically proven to add alpha from ESG.

We highlight key findings from a Harvard Business School study that combines traditional ESG scores with alternative data sources that measure public sentiment momentum on corporate sustainability performance. The study finds that an ESG factor that goes long on firms with high or improving ESG performance and negative sentiment momentum, and short on firms with low or decreasing ESG performance and positive sentiment momentum delivers significant positive alpha.