Environmental, Social, and Governance (ESG) considerations are ascendant priorities for consumers, policy makers, and corporations. These global ESG megatrends have pecuniary implications for corporate performance. At Causeway, our commitment and approach to ESG are informed by research. We believe that shareholder-friendly corporate governance and sustainable business practices have the potential to contribute positively to a company’s performance over a full market cycle.
ESG Integration
Causeway has applied a deliberate approach to integrate ESG into our process. We have provided training to fundamental analysts on ESG issues, built desktop applications to facilitate ESG integration, and instituted accountability for observing integration procedures.
ESG Research
Since becoming a signatory to the United Nations Principles for Responsible Investment (PRI) in 2016, Causeway has conducted programmatic research aimed at identifying key ESG issues, developing a structured and evidence-based understanding of those issues, and mapping out and empirically testing their investment implications. Our research examines both traditional and big unstructured data sets, employing state-of-the-art quantitative and statistical learning techniques combined with deep fundamental knowledge of the economic drivers of investment performance.
We have developed Causeway Fiduciary ESG Scores that evaluate companies on material ESG issues. These scores predicted returns in a global equity universe and maintained out-of-sample efficacy in back tests.
ESG Analytics
Using Causeway Risk Lens, you can see funds’ Causeway Fiduciary ESG Scores. Watch this video to learn more.
Director of ESG Research
Mozaffar Khan, PhD
Director of ESG Research
Dr. Khan is a portfolio manager and director of ESG research at Causeway. He joined the firm in April 2017 and has been a portfolio manager since December 2021. Prior to Causeway, he was the Honeywell Professor at the University of Minnesota’s Carlson School of Management, the James M Collins Professor at Harvard Business School, and earlier, an assistant professor at the MIT Sloan School of Management.
Dr. Khan has published numerous scientific articles in leading academic journals on stock return prediction models and signals. His research on stock return predictability extended to ESG factors when he coauthored the seminal 2016 Harvard paper on ESG Materiality.1 This paper “marked a turning point in how investors view ESG”.2 His 2019 paper on ESG and global stock returns, published in the CFA Institute Financial Analysts Journal, is the most read ESG article published in that journal in the last decade.3
At Causeway, Dr. Khan works closely with fellow Causeway quantitative portfolio managers in alpha research and portfolio construction. Dr. Khan developed our proprietary ESG alpha scoring engine that identifies companies with strong ESG characteristics and alpha potential. He is also the architect of our ESG integration approach, and developed new Global Sustainable strategies. He leads our ESG research, integration, product development, and ESG portfolio management efforts.
Dr. Khan earned a PhD in accounting, with a focus on statistics, economics, and finance, from the University of Toronto.
Read our interview with Mo about forging an alpha-centric approach to ESG.
1 “Corporate Sustainability: First Evidence on Materiality”, 2016, with George Serafeim and Aaron Yoon. Harvard Business School paper.
2 “As the climate changes, ESG investing powers into the mainstream”, November 17, 2018, by Attracta Mooney and Peter Smith, Financial Times.
3 “Corporate Governance, ESG, and Stock Returns around the World”, 2019, CFA Institute Financial Analysts Journal.
Speaking Appearances
Mo Khan has been invited to and will present on the topic of ESG and public equity returns to a large public pension system as part of their internal presentation series – June 2022
Mo Khan will present at the University of Massachusetts – April 2022
Mo Khan will be a guest speaker at Imperial College – London, January 2022
Presentation at University of Southern California global academic conference – Los Angeles, December 2021
Guest lecture at the University of Texas – Austin, November 2021
Guest lecture at the University of Waterloo – Ontario, August 2021
ESG Resources
webcast / February 2022
Introducing Causeway Global Sustainable Leaders Equity Strategy
Causeway has gone one step further in its ESG journey and developed sustainability-focused investment strategies.
article / July 2021
Value Investing in the Energy Transition
Outside of expensive renewables pure plays, how can investors participate in the energy transition?
webcast / March 2021
A Value Manager's Take On Disruption: ESG At Causeway (Webinar)
Sustainability and corporate responsibility drive consumer, policy, and company priorities, now more than ever before. A discussion of Causeway's approach to ESG considerations.
article / March 2021
Forging an Alpha-Centric Approach to ESG
A discussion of ESG's relation to alpha, incorporating ESG into an investment framework, ways to evaluate managers on ESG, and how the field is evolving.