Ignites recently reported on a recent Morningstar paper regarding the influence of its ESG scoring system on investor decision-making. Evidently, investors are avoiding funds with low ESG scores but are not automatically seeking out funds with high ESG scores. According to the article, “A one-globe rating corresponded to a 3.7% lower growth rate over the tested period, the paper finds. Funds with better globe ratings did see higher growth rates, but the impact was much smaller — four-globe funds had a 1.5% higher growth rate while five-globe funds had a 1.4% higher rate.”
George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.