Myopia and the Long View: Perspectives on Resistance to ESG Integration

The attached working paper looks at investment manager resistance to ESG Integration from a behavioral perspective. I would be grateful to receive feedback or a critical review of it from anyone so inclined. Thank you.

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Abstract: The effectiveness of the Responsible Investing strategy of ESG Integration (ESGI) is now well established; there is significant use of this strategy among investment managers and a preponderance of data supporting its success in achieving superior risk-adjusted returns over the long-term. Despite this consensus and evidence, however, skepticism regarding the effectiveness of ESGI persists. Attempts to address this situation by reaching skeptics thus far have not been successful for a variety of reasons, mainly because they have been working from the premise that ignorance and/or limited cognition are the cause. Sociological theory lends some insight into why acceptance of the effectiveness of ESGI and the implications thereof represent a threat to a skeptic’s identity. This being the case, a new approach to outreach is called for. The suggestions in this paper call for forgoing any attempts to convince skeptics of the positive environmental and social implications effected by ESGI strategies in favor of appealing to investment managers’ competitive nature.

You can download the paper here.

Key Words: adoption, ESG Integration, Key Performance Indicator, Responsible Investing, sociology, skepticism, strategy, sustainability

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