Corporate Governance and Stakeholder M ...
Stakeholder management emphasizes the need for a company to consider the needs of... Read More
Environmental, social and governance factors are collectively referred to by the acronym “ESG.” ESG integration is the practice of considering environmental, social, and governance factors in the investment process. Ideally, ESG integration should be implemented across all asset classes, including equities, fixed income, and alternative investments.
Sustainable Investing (SI) and Responsible Investing (RI) are sometimes used interchangeably with ESG integration. Socially Responsible Investing (SRI) is an investment strategy that is said to incorporate ESG issues. This strategy has however historically been represented by the practice of excluding companies and industries from investment consideration on the grounds that they oppose an investor’s moral or ethical values. An example would be to exclude tobacco companies from a stock portfolio due to the health-related consequences of smoking.
Managers and investors tend to define and implement ESG mandates in many different ways. As a result, differences often arise among investors regarding the ESG factors that should be considered in the investment process and to what extent they should be implemented within a portfolio.