We find that :

• The controversy momentum is a relevant measure of “new” information surrounding companies and their involvement in controversial events. While the volume-based measure suffers from biases in the cross-section and over time, the controversy momentum remains comparable across companies through time and across regions.

• European investors price controversies more aggressively than their U.S. counterparts, which supports the commonly held view that the European investment community has achieved a more robust integration of sustainability issues into their investment process. Controversies tend to get priced in more rapidly in the U.S., necessitating a more refined timing strategy.

• Integrating controversy-based signals into investment strategies can beneficially impact portfolio performance, but sparse signals only lead to marginal improvements.

Download the whitepaper on ravenpack.com/research and integrate a comprehensive ESG controversy scoring framework into your long-standing investment strategies.