SI Indexes – Top-down targets or bottom-up aesthetics?

A debate is brewing as to whether headline (or “top-down”) Sustainable Investment (SI) targets, such as carbon emission reductions or ESG uplifts, are inconsistent with stock level (or “bottom-up”) conditions required for successful corporate engagement.

This paper demonstrates how the target exposure methodology can be used to construct indexes with multiple portfolio-level objectives that are consistent with desirable SI characteristics at the stock level, and examines simulated indexes covering a number of use cases that provide varying levels of engagement using tilts, stock level constraints and stock exclusions.

You can now read the full research report at the link below