Is Factor Investing a Good Investment Strategy?

The increase in ESG investing insists businesses reflect a positive corporate social responsibility image. More and more millennials are joining the investment community, which urges companies to act in such a way that appeals to the investors. In fact, investors recognize corporate social responsibility as a more relevant measure of a company’s performance than quarterly earnings. But, measuring the ESG performance is quite challenging. This is the reason why many investors focus more on short-term financial metrics because they have some idea of a company’s profits but don’t know what its ESG performance is.   Thus, ESG rating agencies collect and aggregate information on an organization’s ESG performance and come up with an ESG score. However, different agencies disagree on a company’s ESG performance, which results in troublesome divergence in ESG ratings.    Is a High ESG Rating Good? ESG reports and ratings are an important tool for investors, financial m...