While sustainable investing is not a new concept, its growing popularity means a sharper focus is needed on how to achieve sustainability goals without sacrificing returns or taking on too much unintended risk.
At Qontigo, we believe strongly that paying attention to a company’s ESG policies and practices is additive to risk-adjusted returns, and our indices have proved this is the case. However, we also understand that some investors are looking to maximize portfolio efficiency: they want the highest possible return for a given level of risk, or to find the lowest-risk portfolio that gives them a desired return. Sustainability adds a third ”non-financial” leg to this stool: investors who believe as we do in the importance of sustainability in driving future returns and/or in lowering portfolio risk use sustainability expectations as the measure of return in the equation.
Author
Melissa R. Brown, CFA
Managing Director of Applied Research
