Chief Investment Officer: Risk Reduction Key to ESG Investing's Appeal

August 7, 2018

The rap on what used to be called “values investing”—the precursor to environmental, social, and governance investing (ESG)—was that it could be a drag on returns. But investors are increasingly focusing on another aspect of the framework: a method of avoiding risk that threatens stock prices.

ESG strategies have quadrupled in institutional portfolios over the past 10 years, says a survey from the NEPC consulting firm, to $4.7 trillion. True, 88% of pension plans have not incorporated it into their investing philosophy. But one-third of the plans indicated that, while they haven’t adopted ESG, they are interested in the concept.

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