Esg or Not Esg? A Benchmarking Analysis

Abstract

Sustainable investments are increasingly leaving their niche position to enter financial markets in a remarkable way in recent years. In this scenario, ESG (Enviromental, Social, Governance) practices are emerging alongside the risk-return approaches that for years have exclusively determined the portfolio choices of investors. 
 This paper aims to give a contribution to the flourishing debate on the application of ESG criteria to investments’ selection, using a case study through a benchmarking approach. The empirical investigation focuses on a two-level analysis of GIS Global Bond ESG Fund (EUR Hedged), managed by PIMCO management company. Results highlight that ESG practises should be referred more as a complementary rather than alternative approach for portfolio management.

Environmental, Social and Governance (ESG) Disclosure and the Small and Medium Enterprises (SMEs) Sustainability Performance

“…Ref. [44] emphasized that ESG practices should complement portfolio management. The increasing number of ESG practices led to the establishment of several global reporting initiatives, such as Global Reporting Initiatives and the United Nations Global Compact [45].…”

“…Another participant added that "Recently, if we wish to work with a foreign partner, we are required by the foreign company to have sustainability reports" (Interview Participant). It should complement portfolio management [44].…”

“…Regarding corporate legislation, some interviewees stressed that decision-making was not affected by the ESG consideration unless there was outside regulatory enforcement. Governments must put in place incentive legislation that contributes to the activation of these practices by small companies, as they did with large and joint stock companies [30,43,44]. As one participant mentions, "First, before blaming the legislation, we need to define and raise awareness of such practices and the extent of their importance and the return from their application to small and medium companies" (Interview Participant) [47][48][49].…”