We are all active ESG investors now

Sydney Morning Herald February 18, 2022

The value of investments in financial products that claim to abide by environmental, social and governance (ESG) rules has grown from $US23 trillion to $US35 trillion globally suggests The Economist.

Research firm Bloomberg Intelligence reckons ESG products could exceed $50 trillion by 2025.

On the domestic front, the 2021 Investor Product Needs Report released earlier this year by Investment Trends found that close to one in two investors consider ESG principles as part of their decision making.

The big question is why so many Australian investors are interested in ESG and the answer is simple: ESG funds typically tell their customers that, among other things, they do their bit to tackle climate change or equality when they invest in publicly listed companies.

Question: One implication of modern portfolio theory (MPT) is that engaging in ethical stock selection results in a riskier portfolio than investing in all stocks regardless of their ethical qualities.

True

False