Fund managers find alpha in "artificially low" ESG scores

A lack of reliable ESG data in emerging markets is proving a boon for some of the heavyweights of global finance.

Data disclosure “across the board is pretty challenged” in emerging markets, compared with the developed world, “and especially on some of the more nuanced environmental and social-related issues,” said Luke Barrs, managing director and global head of fundamental equity client portfolio management at Goldman Sachs Asset Management. | Photo: Andrew Kelly/Reuters/Ritzau Scanpix/REUTERS / X02844

Federated Hermes is among investment firms that have spent the past year building its ESG exposure to emerging markets, where it says “artificially low” environmental, social and governance ratings have created openings for investors willing to do their own research.

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