Invest
Do ESG ratings go far enough?
While benchmarks for sustainable investing are helpful, they may be “insufficient” in identifying the specific impacts of environmental regulations, an asset management firm has said.

Do ESG ratings go far enough?
While benchmarks for sustainable investing are helpful, they may be “insufficient” in identifying the specific impacts of environmental regulations, an asset management firm has said.

According to Lazard Asset Management co-CEO Jeremy Taylor, active managers may be better equipped to analyse the flow-on effects of environmental regulations on companies and sectors and as such could offer environmental, social and governance-aligned investors an advantage.
“Active, bottom-up fundamental managers are better able to anticipate the risks and opportunities created by structural shifts compared to other approaches that rely on static assessments, owing to a thorough appraisal of financial statements and regular engagement with company management to generate unique insights into how different businesses are developing,” Mr Taylor said.
In a recent research paper, Mr Taylor, together with Nathan Cockrell, Alistair Godrich and Neil Millar, noted that investors are increasingly relying on environmental, social and governance (ESG) ratings to provide insights and guide decisions.
“While ESG ratings offer valuable inputs, we believe that in isolation they are insufficient to accomplish our objectives as they have some shortcomings that we believe can only be resolved through rigorous bottom-up fundamental analysis,” the researchers said.
“Frequent and thorough company engagement and the integration of meticulous ESG analysis into investment processes could potentially help investors sidestep the significant losses that tend to accompany ESG failings.”
The researchers put this down to the differing impact of ESG factors on companies, sectors, regions and time frames.
“While there is a growing acceptance that a company’s ESG practices can affect its valuation and financial performance, tying the underlying factors together is rarely a straightforward process, as many factors relating to ESG are often subjective, and difficult to track and quantify,” the researchers said.
The difficulty in anticipating and understanding the impact of environmental considerations on the automotive, shipping and oil refining sectors in particular is an example, the researchers said.
“These three sectors serve to illustrate the structural shifts and second-order effects that are being created by vast swathes of environmental regulation. Understanding the impact of these factors on a company’s outlook and being able to anticipate them can be a challenge, even for well-informed investors,” the researchers said.

Property
House prices tipped to surge 30% on the back of cheap money
According to new documents released from the Reserve Bank of Australia, persistently low interest rates could push up property prices by as much as 30 per cent. ...Read more

Property
Double-digit price growth to stick around as ‘property boom’ arrives
According to leading indicators, Australia’s property boom officially began in November, following several slow months on the back of the COVID crisis, with double-digit price growth already logged ...Read more

Property
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more

Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more

Property
Invest in property or watch savings dwindle, expert warns
Money is cheaper than it’s ever been on the back of a favourable interest rate environment, compelling Aussies to shift away from other types of investment vehicles and into property investment. ...Read more

Property
Is 2021 a great year to buy property? Aussies think so
2021 is tipped to be one of the busiest years for property ever as money remains cheap and readily accessible, with a majority of Aussies agreeing that now is a good time to buy. ...Read more

Property
Young Aussies set their sights on home ownership in 2021
The COVID-19 pandemic has accelerated younger Australians’ desire to own their own home, despite affordability remaining a significant concern, new research has revealed. ...Read more

Property
HomeBuilder stimulus causing surge in new houses: ABS
Housing schemes such as HomeBuilder and historically low-interest rates are causing a surge in new properties being built in Australia, official stats have shown. ...Read more

Property
House prices tipped to surge 30% on the back of cheap money
According to new documents released from the Reserve Bank of Australia, persistently low interest rates could push up property prices by as much as 30 per cent. ...Read more

Property
Double-digit price growth to stick around as ‘property boom’ arrives
According to leading indicators, Australia’s property boom officially began in November, following several slow months on the back of the COVID crisis, with double-digit price growth already logged ...Read more

Property
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more

Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more

Property
Invest in property or watch savings dwindle, expert warns
Money is cheaper than it’s ever been on the back of a favourable interest rate environment, compelling Aussies to shift away from other types of investment vehicles and into property investment. ...Read more

Property
Is 2021 a great year to buy property? Aussies think so
2021 is tipped to be one of the busiest years for property ever as money remains cheap and readily accessible, with a majority of Aussies agreeing that now is a good time to buy. ...Read more

Property
Young Aussies set their sights on home ownership in 2021
The COVID-19 pandemic has accelerated younger Australians’ desire to own their own home, despite affordability remaining a significant concern, new research has revealed. ...Read more

Property
HomeBuilder stimulus causing surge in new houses: ABS
Housing schemes such as HomeBuilder and historically low-interest rates are causing a surge in new properties being built in Australia, official stats have shown. ...Read more