Fund activism breakdown yields surprising result

Managers paid to engage boost ESG ratings of holdings

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Turns out that investors who want to effect change need to be there.

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — Though I have long believed that engagement is the most effective way of changing corporate behavior, I have had to admit that there’s little empirical evidence supporting its efficacy.

This is finally changing.

Some of the most encouraging evidence has emerged from a 2018 Japanese government initiative that paid managers of its pension fund to actively engage with companies to improve their ESG performance. A new study has found that companies with which the managers engaged improved their ESG scores significantly more than other comparable companies.