Alex Edmans and Tom Gosling win PRI prize
Sustainable Investing paper co-authored with LSE’s Dirk Jenter recognised with Outstanding Research Award
London Business School (LBS) Professor of Finance Alex Edmans and Executive Fellow of Finance Tom Gosling have won the 2024 PRI Outstanding Research Award for Best Paper.
The researchers claimed the prize with co-author Dirk Jenter, Professor of Finance at the London School of Economics and Political Science, for their paper ‘Sustainable Investing: Evidence from the Field’.
The paper draws upon a survey of 509 equity portfolio managers from sustainable and traditional funds to uncover the extent to which they incorporate firms’ environmental and social performances into their investment decisions. It finds that sustainable and traditional funds invest more similarly than commonly believed.
Many traditional asset managers believe that environmental and social factors are correlated with future stock returns. Sustainable asset managers use such factors primarily to improve financial returns, rather than create positive impact at the expense of returns, due to fiduciary duty. These results suggest that clients who want their money invested sustainably should pay more attention to portfolio managers’ actions than whether their fund has a sustainable label.
“Views on sustainable investing have become rather binary," Professor Edmans said.
“Advocates claim that that it always outperforms; some skeptics wish to ban the use of environmental and social factors in investment decisions. We hope that our research helps uncover the complex shades of grey in issues often seen as black-and-white.”
Dr Gosling added: "The academic survey methodology has enabled us to obtain unique insights into whether, how, and why portfolio managers incorporate environmental and social factors into investment, engagement, and voting decisions. We hope this will increase understanding of sustainable investing and inspire new avenues for academic research."
Principles for Responsible Investment (PRI) is an investor initiative, supported by UNEP Finance Initiative and UN Global Compact, focussed on the promotion of responsible investment. It boasts more than 5000 signatories representing more than half of all institutional assets under management globally.
Dr Gosling will present the award-winning paper at the PRI in Person conference in Toronto, Canada, next month.
