ESG & Sustainability — June 1, 2021

Risk, Return and Sustainability: Qontigo ESG Target Indices Provide an Optimal Solution

While sustainable investing is not a new concept, its growing popularity means a sharper focus is needed on how to achieve sustainability goals without sacrificing returns or taking on too much unintended risk.

At Qontigo, we believe strongly that paying attention to a company’s ESG policies and practices is additive to risk-adjusted returns, and our indices have proved this is the case. However, we also understand that some investors are looking to maximize portfolio efficiency: they want the highest possible return for a given level of risk, or to find the lowest-risk portfolio that gives them a desired return. Sustainability adds a third ”non-financial” leg to this stool: investors who believe as we do in the importance of sustainability in driving future returns and/or in lowering portfolio risk use sustainability expectations as the measure of return in the equation.

Author

Melissa Brown

Managing Director of Applied Research