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6th May 2021 by Joe Zammit-Lucia

This letter appeared in the FT

Maybe we shouldn’t take the conclusions from Scientific Beta that environmental, social and governance stocks fail to outperform too seriously (“ESG outperformance narrative ‘is flawed’, new research shows”, Report,, May 3).

First of all, it is far from clear that all corporations that make it into current ESG lists deserve to be there. The reported analysis could easily have been skewed by ESG assessments that merely represent a meaningless virtue-signalling veneer rather than the real thing.

Second, investors invest on the basis of perceived future potential rather than past performance. As political pressures continue to mount and ESG evaluations become more discriminating, it seems likely that those corporations that are truly ahead on ESG skills will in fact outperform.

Rather than ignoring ESG as an investment consideration, the real lesson from the analysis could as easily be that investors should be more discriminating in how they assess corporate capabilities rather than swallowing hook, line and sinker evaluations from investment houses desperately inflating their so-called ESG portfolios to meet the huge surge in investor demand.

Joe Zammit-Lucia Co-Founder, RADIX Centre for Business, Politics & Society Amsterdam, The Netherlands


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