Exploring ESG data: A deeper understanding (Calvert)

By Laura Ahmadi AVP, ESG Research Analyst Calvert Research and Management, and Cheryl Wilson VP, ESG Senior Research Analyst Calvert Research and Management

Executive summary

  • New research by the Calvert Institute presents evidence of the connection between environmental and social factors and equity outperformance.
  • Gaps and inconsistencies in the data revealed the limitations of relying on one or a small number of data providers.
  • Single-factor test portfolios for a range of “E” and “S” key performance indicators (KPIs) from five data vendors were used to determine the strength of each KPI’s correlation with equity upside, e.g., each KPI’s “materiality factor.
  • The analysis was performed at the subindustry level across 16 ESG issues and demonstrated how different ESG issues vary in financial significance across different industries.
  • Despite the growing amount of ESG data available to investors, much of this data was not deemed financially material.
  • Responsible investors should seek to cut through the noise and incorporate the ESG information that will help drive better investment decision-making.

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