9. ESG Considerations for Investors
j. describe environmental and social considerations in investment analysis;
k. describe how environmental, social, and governance factors may be used in investment analysis.
What is ESG?
ESG integration is the practice of considering environmental, social, and governance factors in the investment process.
What are four ways that asset managers and asset owners integrate ESG issues into the investment process?
1. Negative screening is a type of investment strategy that excludes certain companies or sectors from investment consideration because of their underlying business activities or other environmental or social concerns.
2. Positive screening and best-in-class strategies focus on investments with favorable ESG aspects.
3. Thematic investing focuses on a single factor, such as energy efficiency or climate change.
4. Impact investing strategies are targeted investments, typically made in private markets, aimed at solving social or environmental problems.