Leading scholars and practitioners come together to reimagine the way investors approach ESG investing
The partnership will build on Arvella’s investment-friendly ESG framework, which prioritizes investment returns alongside impact
NEW HAVEN, Conn. and PARIS, Sept. 26, 2022 (GLOBE NEWSWIRE) — The Yale Initiative on Sustainable Finance (YISF) has partnered with Arvella Investments with the common goal of integrating sustainable investing by exploring how investors can use ESG to increase returns on investment. 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 into portfolios, and was developed in collaboration with other investors1 and scholars from top institutions.2
After spectacular growth in ESG-labeled assets, ESG investing is facing an unprecedented backlash. In Arvella’s view, two factors are behind this backlash. First, investors have challenged the weak analytical underpinnings of ESG investing, anticipating that it is likely to generate below-average long-term investment returns. Second, the lack of meaningful real-world impact has fueled claims of greenwashing.
Benoit Mercereau, Chief Investment Officer of Arvella Investments said: “Arvella’s ESG for investors The platform provides the paradigm shift to deal with this backlash. Instead of asking how investors might have an impact, it strives to use impact to help investors achieve their traditional goal of delivering superior risk-adjusted returns.
“Unless investors think ESG is more of an opportunity than a risk, the scope for sustainable investing will be limited,” said Yale Initiative on Sustainable Finance Faculty Co-Director Todd Cort. “ESG for investors offers an innovative analytical framework on how investors can use ESG to increase investment returns. The Yale Initiative for Sustainable Finance team is delighted to have the opportunity to work on this innovative approach alongside Arvella Investments.
The research and insights available through ESG for investors offer exciting prospects and opportunities for asset managers. Creating innovative investment strategies using Arvella’s framework – which covers all asset classes and geographies – could help them attract clients seeking the best possible returns, while satisfying customers who also want the best possible impact.
The potential financial benefit is significant, according to Arvella. Adopting best practices on just two key ESG issues can boost a company’s share price by 22%, for example, ESG for investors‘research suggests3. The associated potential impact may also be significant. Adopting best practices in waste management would reduce global waste by 72% and earn shareholders a 5% windfall, on average, for example.
Benoit Mercereau adds, “We are striving to set a new standard for the industry and pave the way for ‘sustainable’ and ‘traditional’ investing to converge into a single offering, which may have the potential to provide both higher yields and higher impact.
“Greenwashing is a rational, if unambitious, reaction to the absurd demands of ESG activists,” he says. “ESG activists urge investors to do things that don’t make investment sense. Unsurprisingly, most investors won’t. ESG proponents should recognize the reality of investors and do so that Company case for ESG improvements instead. If a company’s positive ESG impact increases earnings, investors will stop at nothing to maximize that impact. We are excited to work with the distinguished team at the Yale Initiative for Sustainable Finance, the Yale Center for Environmental Law and Policy, and the Yale Center for Business and the Environment to lay the scientific foundation for investment-friendly ESG.
As part of this partnership, Arvella’s CIO, Benoit Mercereau, will join the YISF Advisory Board. He has a long-standing connection to Yale, having earned a doctorate 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 is also looking to partner with a number of like-minded asset managers to launch innovative investment strategies using its pioneering approach to sustainable investing.
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- Lionel Melin (MacroLucid Research); Donough Kilmurray (Davy).
- Ahyan Panjwani (Yale University, now at the Federal Reserve); Tianhao Yao (HEC Paris).
- Melin, Mercereau and Lugo. “Creating shareholder value through ESG engagement”, 2022.