How so-called “ESG laggards” can drive alpha

Companies that have a poor ESG score but are on track to improve tend to drive outperformance over companies with static ESG records, explain the Investment, ESG and Research teams at Generali Insurance Asset Management1 (GIAM). GIAM is part of the Generali Investments platform.

  • We believe there is value, both financially and in social and environmental terms, in engaging with so-called ESG laggards to help them improve.
  • Companies with a low but improving ESG profile tend to outperform the market and their industries.
  • A broad, experienced, collaborative ESG team that is integrated across the investment process is crucial for identifying the ESG laggards on the verge of improving, while avoiding the ones that will not.

ESG analysis is at the heart of our sustainable investment strategy. We aim to deepen our understanding of companies by going beyond ESG scores, using a broad and detailed framework to find buying opportunities even among so-called “ESG laggards”.

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Supporting documents

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