ESG investing’s popularity has continually increased in the past five years. ESG data is increasingly integrated into investment processes. However, the information contained in ESG-related news for corporates has not been entirely exploited by institutional and long-only investors.
The objective of this paper is to identify the benefits of ESG news information for active and factor-based investors. Indeed, one of the issues with ESG is the low frequency of scores updates. For active management, we analyze ESG-sorted portfolios in investment universes filtered by ESG news volume. Metrics of ESG-related news are sourced from Truvalue Labs, a provider of Artificial Intelligence powered ESG insights and analytics.
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