ESG Investing

There are two overarching types of ESG investing: (1) ESG Incorporation – incorporating ESG factors when building a portfolio., and (2) Active Ownership/Stewardship – encouraging one’s portfolio companies to improve their ESG practices. These categories of ESG investing can be further broken down as follows:

• ESG Incorporation

  • Integration: Including ESG issues in investment analysis and decisions – using ESG research, data, and insights to guide investment decisions.

  • Screening:  Applying filters to potential investments to either include or exclude them from a portfolio.  (E.g., a mutual fund that excludes certain stocks (like tobacco and fossil fuel or an ETF that focus on companies that score in the 10% of their peers on ESG factors).

  • Thematic: A top-down investment approach focused on opportunities created by broad trends that unfold over time.  (E.g., alternative/clean energy).

• Active Ownership/Stewardship

  • Engagement: Engaging with companies and management on specific ESG issues.   

  • Proxy Voting: Proposing and voting on ESG related shareholder resolutions. 

According to a US Sustainable Investment Foundation report, as of 2020 more than 1/3 of assets under professional management (more than $17 trillion) were managed using some sort of sustainable investing strategies.

Types of ESG Investments

For details on specific ESG product-types, please click on the investment in which you are interested: