The first ESG (Environmental, Social, and Governance) scores on the local capital market have been available since February 8 on the BVB Research Hub platform of the Bucharest Stock Exchange (BVB), at a time when ESG assets are increasingly in demand.

But the ESG rush is, on the other hand, seen as risky (due to lack of discipline in ESG investing), potentially arbitrary (due to wide discrepancy among ESG rating scores provided by different agencies) and very likely at the root of the next asset bubbles - given the rising "wall of money" chasing for a limited number of ESG stocks.

Such concerns are, however, toned down by those concluding that ESG investing provides not very different outcomes than rational investing: the world's largest ESG-flagged ETF's top holdings are Apple, Microsoft, Amazon, Facebook, and Alphabet. The world's largest 'conventional' ETF, however, has the same five stocks in the same order, albeit with slightly different weightings, Dewy John notes in FT Adviser arguing against the ESG bubble scenario.

The scores launched at BVB are part of the reports prepared by Sustainalytics, a global leader in the ESG research and rating segment.

The scores are published on a voluntary basis, and eight BVB-listed companies joined the project at this initial stage: Antibiotice Iasi (ATB, medicines producer), BRD Groupe Societe Generale (BRD, bank), Farmaceutica Remedia (RMAH, medicines production), Nuclearelectrica (SNN, nuclear energy), OMV Petrom (SNP, oil and gas), TeraPlast (TRP, construction materials), Transgaz (TGN, natural gas transport company) and Bursa de Valori Bucuresti (BVB), Bursa.ro reported.

The launch of the first ESG scores on the local capital market takes place in a favourable global context, BVB said in a statement, arguing that the total assets invested in funds that take into account the ESG criteria in the allocation of investments represent about a third of the total global assets, and investment funds dedicated to ESG strategies have assets of over USD 2.2 trillion. 

iulian@romania-insider.com

(Photo source: Inquam Photos/George Calin)