ESG: Performing under pressure

A question facing investors who align their investments to ESG benchmarks is how their portfolios will perform in times of market stress. Recent events, including the war in Ukraine have stressed markets and driven up energy prices, putting ESG factors under pressure. Investors are accustomed to considering risk and return as the two dimensions that guide asset allocation. As a result of our study, we fnd that two additional elements – time and preference – are needed to augment this process in an ESG world.