As risk management has drawn more attention in recent years, institutional investors who have integrated environmental, social and corporate governance (ESG) considerations into their process have put themselves in a better position to assess risks and opportunities in their portfolios. In our view, keeping track of how companies handle ESG issues is an alpha tool that also performs an important risk function – and we have found it to be a powerful early-warning system.
To learn more about investment managers’ ESG approach, we recommend asking these five questions:
1. What is your philosophy for integrating ESG risks within your investment process for all asset classes, from both a risk-management and a return-enhancing perspective?
2. How effectively do your portfolio managers engage with company management teams and offer best practices on ESG issues?
3. Do you have access to ESG data (such as company safety records, waste-disposal practices and executive compensation), and do you have experts capable of interpreting the impact of ESG risks on your portfolios?
Read the full white paper at the link beneath Related Files