What’s Green and Outperforms the Market?


Companies that take steps to become greener, historical data show, outperform similar companies that haven’t taken climate change action.

With that insight, and as part of its expanding Environmental, Social, and Governance (ESG) platform, Societe Generale is readying new investment products based on a “Smart” index that identifies U.S. companies that are taking positive climate change action.  

To create the index, Societe Generale teamed up with the technology company Entelligent, incorporating Entelligent’s “E-Score” metric, which selects stocks based on a company’s climate change behavior. 

We believe this product has enormous potential to cultivate client interest and investment; and that, in turn, will be a force driving the markets to reward the most sustainable companies

Mike Clark
Societe Generale Americas Head of investor solutions

Specifically, the “E-Score” metric measures a company’s resilience to climate change. It answers the question of viability of each company’s business model given the potential climate developments, including physical effects, social effects, economic shifts, and policy changes. Crucially, it forecasts the impact of these effects on profitability, using a refined global climate model and statistical scenario analysis.

This statistical profitability function allows Societe Generale to develop an ESG stock selection strategy that can focus on enhanced returns in addition to sustainability. “We think this combination of enhanced returns and sustainability dramatically increases the viability for investors who will, as a consequence, be more likely to allocate more of their capital towards ESG,” stated Clark.

The “E-Score” is especially compelling because it is differentiated among competing indicators. It represents a truly sector-agnostic and financially conscious approach to measuring the impact of climate change on the equity market.

We believe that our more ESG conscious clients will appreciate an ESG model that doesn’t categorically exclude Oil & Gas companies and treats them like any other enterprise in terms of its ability to adapt to the future climate context. For example, if an Oil supermajor is heavily investing in offshore wind farms that help it to transition away from fossil fuels, Entelligent’s model treats this very favorably. That is a concept that resonates quite well with clients that want to be progressive but don’t want to sacrifice returns

Mike Clark
Societe Generale Americas Head of investor solutions

Societe Generale’s platform of ESG products which includes ESG research, positive impact finance and the ESG index platform has grown significantly since 2015 when the bank announced its commitment to the goal of promoting the reduction of greenhouse gas emissions.  “We are committed to expanding our ESG offering as part of our broader commitment to foster an inclusive and greener economy,” Clark stressed.