Recent academic work suggests that promoting better ESG outcomes can boost investment returns by 1-5%.1
At Arvella, we share this belief and work to promote sustainability in three ways:
We engage with our managers to improve the E, S and G practices of their portfolio companies. Our approach is pragmatic with a focus on concrete outcomes.
We conduct innovative in-house research to address the lack of investment tools currently available to sustainable investors. We aim to publish in international scientific journals to validate the rigour of our work. By disseminating our research findings, we also magnify our impact.
We invest in funds with top ESG practices. For example, we are seeding a climate-aligned global equity strategy, building on our climate research. We also select the best ESG index funds based on a framework we developed to assess how effective asset managers are at promoting sustainability.
Latest work includes:
1 Recent academic work suggests that successful voting or engagement on ESG topics adds 1-5% to long-term returns. Sources: Flammer, Caroline. 2015. “Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach”; Dimson, Elroy, OğuzhanKarakaş, and Xi Li. 2015. “Active Ownership” The Review of Financial Studies 28 (12): 3225–68. ; Cuñat et al. 2012. “The Vote Is Cast: The Effect of Corporate Governance on Shareholder Value”; Barko, Tamas, Martijn Cremers, and Luc Renneboog. 2018. “Shareholder Engagement on Environmental, Social, and Governance”.
2 CLIMO (“Climate Optimiser”) is a three-dimensional portfolio optimisation tool developed by Arvella Investments. It allows to find the optimal trade-off between expected returns, expected risks and climate alignment.
3 The output is Climate SBAM (“Climate Science Based Alignment Metric”), a global climate alignment database. I Care & Consult pioneered a methodology to measure a firm’s climate alignment in 2017. I Care & Consult and Arvella Investments later expanded the methodology to cover more stocks.