Do ESG Investments Make for Better Returns?

The video explores the impact of ESG (Environmental, Social, and Governance) factors on investor returns. It discusses how ESG can reduce tail risk by avoiding riskier stocks, such as those in the oil sector, and compares the performance of carbon-free and all-world indices. The video also presents differing views on ESG's effect on returns, with some arguing it leads to lower returns while others see it as a value play. Additionally, it highlights the role of sustainable investing in increasing the cost of capital for less ethical companies and emphasizes the importance of personal values in investment decisions.

What is one of the main reasons investors believe ESG investing leads to better returns?

• It increases the upside risk.

• It ensures government subsidies.

• It guarantees higher dividends.

• It reduces tail risk.

Why do some investors think ESG investing might lead to lower returns?

• Because ESG stocks are less liquid.

• Because ESG stocks have higher volatility.

• Because shunned stocks are undervalued.

• Because ESG stocks are overvalued.

What is the argument for embracing lower returns in sustainable investing?

• It reduces the cost of capital for good companies.

• It increases the cost of capital for bad companies.

• It ensures higher market share.

• It guarantees government incentives.

What percentage of investors in the survey expect better returns from ESG investments?

• 46%

• 66%

• 76%

• 56%

What additional factor do 76% of investors consider important in ESG investing?

• Government policies

• Personal values

• Economic forecasts

• Market trends