ESG ratings are a new type of performance evaluation like analyst forecasts or bond ratings
Image: Shutterstock
Investment funds that prioritize environmental, social, or governance considerations have proliferated in recent decades.
Investment managers who employ these strategies (which are often gathered under the acronym “ESG”) might, for example, base investment decisions on companies’ carbon output, their employees’ safety on the job, or the percentage of women and minority leaders in top governance positions.
Fund managers who want to build strategies around such granular details need to interpret reams of data and parse ever-updating news and corporate reports. So more and more research firms are now addressing this growing need.
[This article has been republished, with permission, from Kellogg Insight, the faculty research & ideas magazine of Kellogg School of Management at Northwestern University]