ESG Investing and its Discontents

11 September 2023

35 min read

What You Need to Know

There is currently a huge debate about the appropriate role of ESG investing. We argue that, far from being an isolated topic, it is intimately linked to the big fault lines of the investment industry, i.e. active versus passive, public versus private assets, and the challenge of preserving purchasing power in a new inflation regime.

Some would argue that ESG investing will inevitably grow, while others deride it as “woke capitalism.” Neither description really rings true. Much of the potential controversy comes down to whether ESG investing requires setting extra goals other than maximizing return/risk, represents a different style of investing or is something else. There are core parts of ESG investing that do not require such extra goals. However, at the same time, we argue that many of these approaches to ESG investing are really what it means to actively invest, rather than some distinct and separate category of investing.

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The views expressed herein do not constitute research, investment advice or trade recommendations, and do not necessarily represent the views of all AB portfolio-management teams and are subject to change over time.

About the Authors

Inigo Fraser Jenkins

Inigo Fraser Jenkins is Co-Head of Institutional Solutions at AB. He was previously head of Global Quantitative Strategy at Bernstein Research. Prior to joining Bernstein in 2015, Fraser Jenkins headed Nomura's Global Quantitative Strategy and European Equity Strategy teams after holding the position of European quantitative strategist at Lehman Brothers. He began his career at the Bank of England. Fraser Jenkins holds a BSc in physics from Imperial College London, an MSc in history and philosophy of science from the London School of Economics and Political Science, and an MSc in finance from Imperial College London. Location: London

Alla Harmsworth

Alla Harmsworth is Co-Head of Institutional Solutions and Head of Alphalytics at AB. She was previously head of European Quantitative Strategy at Bernstein Research. Prior to joining Bernstein in 2015, Harmsworth worked for two years on Nomura's Institutional Investor-ranked European Equity Strategy and Quantitative Strategy team. Her previous experience includes seven years at Fidelity as a quantitative analyst and portfolio manager, along with stints at Nikko Asset Management and ABN AMRO. Harmsworth holds a BA (Hons) and an MA in philosophy, politics and economics from University College Oxford and an MSc in economics from the London School of Economics and Political Science. Location: London

ESG Investing and its Discontents

What You Need to Know

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