Unless mainstream investors come to believe that ESG integration is more an opportunity than a risk, the scope of sustainable investing will be limited.
The Yale Initiative on Sustainable Finance (YISF) proposes to address the question of the correlation between ESG integration and financial performance from a range of fresh perspectives.
YISF will seek to test this correlation by analyzing the existing literature with advanced data analytics and Big Data tools, controlling for the type of sustainability practices and the types of investors (passive against active and semi active).
YISF will also adopt a broader perspective by assessing financial performance as only one source of capital among others (environmental, social…). Building on the recent developments in sustainable accounting, YISF will explore potential for new accounting frameworks for companies that better reflect sustainability performance and offer guidance to investors. Ideally, a new accounting framework would indicate trade-offs between the different types of capital and inform investors of the long-term performance of the company.
Read Todd Cort's research on incentivizing multi-capital toward inclusive capitalism.