Putting ESG into Practice: Investment process integration

Aligning Sustainability Objectives

Climate change awareness is a critical objective for the investment industry, as well as for society as a whole, but how is this awareness (and analysis) approached in practice within investment firms? CFA Institute discusses the call-to-action, then provides 10 helpful case studies on everything from decarbonisation strategies to the ways that climate risk scenario analysis can be incorporated into investment processes.

But responsible investing is bigger than just climate awareness, and its roots are continually expanding into other aspects of the industry. This could imply the integration of responsibility-themed objectives into other asset classes such as fixed income or private equity. Even practices like securities lending can be approached from a responsible investment perspective, as State Street explains. And if that's not enough, we've also included some recent podcasts and webinars on responsible investment and other ESG issues. 

FEATURED CONTENT

Climate Change Analysis in the Investment Process (CFA Institute, 2020)

In addition to the ten case studies that this paper provides on climate change analysis, it also contains information about present day climate change risks and opportunities for investors.

How Governance Factors May Impact Financial Performance (Calvert, 2020)

For compliance reasons, this paper is only accessible in the United States

In this paper, Calvert examines ten governance factors across 8500 companies, finding that the results are clustered based upon the relative strength of countrywide rules and practices.

Sustainable Mythbusting (iShares, 2020)

For compliance reasons, this paper is only accessible in certain geographies

iShares focuses upon debunking some of the myths surrounding sustainable index investing, providing frameworks for structuring these investments and suggesting that index fund managers have both the necessary tools and the capability to integrate ESG considerations.

Circular Economy: Paradise restored? (Candriam, 2020)

For compliance reasons, this paper is only accessible in certain geographies

Our collective progression from a linear economy of taking, making, using, and wasting to a non-wasteful, circular economy may be critical to the survival of the planet. Candriam explores the pitfalls of the linear model in further detail, offering circular suggestions for a sounder future.

ESG INTEGRATION

ESG Taxonomy for Securitized Products (FTSE Russell, 2020)

This insightful paper from FTSE Russell highlights the complexities involved when examining sustainable lending and servicing practices within the residential mortgage-backed securities market.

Fit for the Future: Unboxing ESG in real assets (Aviva Investors, 2020)

For compliance reasons, this paper is only accessible in certain geographies

Aviva Investors looks at how investors can potentially futureproof their portfolios through real assets with positive ESG characteristics. They also discuss incorporating ESG considerations throughout the investment lifecycle.

Aligning Responsible Investing with Securities Lending (State Street, 2020)

State Street describes how investors can align their responsible investing objectives with their securities lending practices, dispelling some rumours about securities lending along the way.

Guide to Responsible Investment in Private Equity for LPs (PRI, 2020)

How can LPs incorporate responsible investment strategies into their private equity investment considerations? This PRI guide aims to shed some light on the subject.

ESG PODCASTS & WEBINARS

Podcast: Carbon neutrality is achievable by 2050 (BNP Paribas, Oct 2020)

Experts from BNP Paribas believe that the EU's emissions targets are achievable, and more specifically, net zero should also be achievable by 2050.

Podcast: Demystifying sustainable investing (Janus Henderson, Oct 2020)

For compliance reasons, this paper is only accessible in the United States and Canada

Three Janus Henderson CFA charterholders contribute to this podcast discussion, talking about sustainable investing and ESG themes that have been accelerated by the COVID-19 pandemic.

Webinar: Higher stakes for climate and ESG investment (State Street, 2020)

State Street panelists lead a roundtable discussion with industry experts from HBS, the IIF, and Task Force on Climate-Related Financial Disclosures on climate risk awareness and other ESG issues.

Why the World Needs a 'Circular Bioeconomy' (World Economic Forum, Oct 2020)

This short WEF article is inlaid with two WEF podcasts; one is on The Great Reset (the restoration of health for global populations as well as the planet) and the other is on the struggle between vaccines and anti-vaxxers.

Podcast: The inevitable policy response — Pathways to net zero (PRI, 2020)

This roundtable podcast from PRI looks at specific paths that could lead towards a net-zero emissions outcome, and how portfolio managers can ensure that they are building resilient and climate-aware portfolios.