Yale Initiative on Sustainable Finance partners with Arvella Investments on Investment-friendly ESG Research
Friday, September 23, 2022
Leading academics and practitioners come together to reinvent how investors approach ESG investing. This partnership will build on Arvella’s investment friendly ESG framework which prioritizes investment returns, alongside impact.
The Yale Initiative on Sustainable Finance (YISF) has entered a partnership with Arvella Investments with a shared goal to mainstream sustainable investing by exploring how investors can use ESG to boost investment returns. YISF will become a research partner of ‘ESG for Investors’, the sustainable investment platform developed by Arvella.
ESG for Investors offers an investment framework and associated tools designed to help integrate ESG in portfolios, and has been developed in conjunction with fellow investors1 and scholars from top institutions.2
After a dramatic growth in ESG-labelled assets, ESG investing faces an unprecedented backlash. In Arvella’s view, two factors drive this backlash. First, investors have challenged weak analytical foundations of ESG investing, anticipating that it is likely deliver subpar long-term investment returns. Second, the lack of meaningful real-world impact has fed greenwashing claims.
Arvella Investments’ Chief Investment Officer Benoit Mercereau says: “Arvella’s ESG for Investors platform provides the paradigm shift to address this backlash. Instead of asking how investors could have impact, it strives to use impact to help investors reach their traditional goal—which is to deliver superior risk-adjusted returns.”
“Unless investors believe ESG is more an opportunity than a risk, the scope of sustainable investing will be limited,” said Yale Initiative on Sustainable Finance Faculty Co-Director Todd Cort. “ESG for Investors offers a pathbreaking analytical framework on how investors can use ESG to boost investment returns. The Yale Initiative for Sustainable Finance team is thrilled about the opportunity to work on this innovative approach alongside Arvella Investments.”
The research and insights available through ESG for Investors offer exciting perspectives and opportunities to asset managers. Creating innovative investment strategies using Arvella’s framework – which covers all asset classes and geographies – could help them appeal to clients who want the best possible returns, while pleasing clients who want the best possible impact, too.
The potential financial upside is large, according to Arvella. Adopting best practices on just two key ESG issues can boost a firm’s share price by 22%, for example, ESG for Investors’ research suggests3. Associated potential impact can be large as well. Adopting best practices in waste management would reduce global waste by 72% and give shareholders a 5% windfall, on average, for example.
Benoit Mercereau adds: “We are striving to establish a new norm for the industry and pave the way for ‘sustainable’ and ‘traditional’ investing to converge towards a single offering, which may have the potential to deliver both superior returns and superior impact.
“Greenwashing is a rational, if unambitious, reaction to ESG activists’ absurd asks,” he says. “ESG activists exhort investors to do things that make little investment sense. Unsurprisingly, most investors won’t. ESG proponents should acknowledge investors’ reality and make the business case for ESG improvements instead. If a company’s positive ESG impact will increase its profits, investors will stop at almost nothing to maximize that impact. We are delighted to be working with the distinguished team at the Yale Initiative on Sustainable Finance, the Yale Center for Environmental Law and Policy and the Yale Center for Business and the Environment to lay out the scientific foundations for investment-friendly ESG.”
As part of the partnership, Arvella’s CIO Benoit Mercereau will join YISF’s Advisory Committee. He has a long-standing connection to Yale, having graduated with a PhD in economics under Nobel Laureate Chris Sims.
The Yale Initiative on Sustainable Finance (YISF) is a joint program between the Yale Center for Environmental Law and Policy and the Yale Center for Business and the Environment. YISF aims to produce fresh thinking and cutting-edge research on integrating sustainability into financial markets and investment decisions.
Arvella Investments is an award-winning sustainable wealth manager based in Paris and London and founded by Benoit Mercereau and Bruno De Kegel, who both previously served as managing directors at Goldman Sachs.
Arvella also looks to partner with a select number of like-minded asset managers to launch innovative investment strategies using its pathbreaking approach to sustainable investment.
In United States
Tel. +1 703 685 9232
+44 7282 604 413
+ 44 7798 881 770
For further information please contact:
Bruno De Kegel
+44 (0)7770 305 650
1. Lionel Melin (MacroLucid Research); Donough Kilmurray (Davy)..
2. Ahyan Panjwani (Yale University, now at the Federal Reserve); Tianhao Yao (HEC Paris).
3. Melin, Mercereau, and Lugo. “Creating Shareholder Value through ESG Engagement,” 2022.