Financial Data Science for Responsible Investors


“Probably the first academic question in responsible investment has been, does integrating environmental, social or governance (ESG) criteria into the investment process have a significant impact on return or risk?

A core component of many responsible investment policies such as the one of the UK’s Environmental Agency Pension Fund (EAPF) is to “apply evidenced based decision making in the implementation of responsible investment.” In the view of Faith Ward, EAPF’s Chief Responsible Investment and Risk Officer, Financial data science is well suited to aid in implementing these policies, as it “uses real world data and focuses on the predictability of outcomes, allowing practical solutions to be developed more quickly than work based on economic theory. It parallels the work to medical science where you would start treating the symptoms of disease long before you know the exact cause.” Following Faith’s foreword, I argue in this chapter that financial data science is a more suitable paradigm for responsible investor than financial economics and why current markets are unlikely fully efficient to ESG data.

Read the full paper (by Andreas Hoepner)

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