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ESG: Should principles come before profits?

Does sustainable investing harm performance?

Should principles come before profits? Is virtue its own reward? Or can you have the best of both worlds? What are the ESG issues that impact performance? Our latest batch of ESG papers ask some fundamental questions.

In the papers that follow, Robeco argues that investors can have the best of both worlds, seeking to dispel some of the myths around sustainability investing. SSGA takes a look at the fascinating overlap that is happening between ESG and factor investing. Other papers tackle a variety of pertinent ESG issues.

Savvy Investor

Materiality Matters: ESG issues that impact performance (Russell Investments, 2018)
(For compliance reasons, this paper is only accessible in the EMEA region)
Russell Investments developed a method to quantify the ESG score for a corporation. This ESG score evaluates and identifies issues that are of financial importance to a company.

ESG: Is it worth it? (Fidelity International, Apr 2018)
(For compliance reasons, this paper is only accessible in the UK & Europe)
What does ESG mean in practice for investors? What are the biggest ESG issues of the next decade? Does sustainable investing have to come at the expense of returns? Fidelity answers these questions and others.

Fact checking nine common ideas about sustainability investing (Robeco, 2018)
This booklet from Robeco discusses 9 misconceptions about sustainability investing, and aims to inspire readers with new ideas related to this particular investment style.

Responsible Investing & the fight against the opioid crisis (Eaton Vance, 2018)
(For compliance reasons, this paper is only accessible in the USA & Canada)
There is an opioid crisis in America, and the impacts are widespread and devastating. Calvert (an Eaton Vance company) details their response to the crisis in this paper.

Social Infrastructure in Europe: Private Investment (Franklin Templeton, 2018)
(For compliance reasons, this paper is only accessible in the EMEA region)
This paper by Franklin Templeton explores investment opportunities within European social infrastructure, such as healthcare and education facilities, affordable housing, and buildings related to emergency and civic services.

A Global Survey on the State of Investor Trust (CFA Institute, 2018)
This fascinating report by the CFA Institute examines trends in investor trust and provides recommendations for investment practitioners on how to improve trust with clients.

Impact Investing - Made Simple Guide (Hermes IM, 2018)
(For compliance reasons, this paper is not accessible in the USA)
This guide examines the world of impact investing, explaining the key aspects of this investment approach, looking at a range of ESG strategies, and the importance of impact investing as a driver of future growth.

ESG Factors in Global Macro Investing (Franklin Templeton, 2018)
(For compliance reasons, this paper is only accessible in the EMEA region)
This paper by Franklin Templeton investments reviews the importance of ESG factors in macroeconomic analysis through a series of specific case studies.

Integrating ESG into Equity Portfolios (SSGA, 2018)
The increasing availability of ESG-related data has laid the groundwork for integrating ESG into equity portfolios for both passive and active managers.

This is Responsible Investing (Eaton Vance, 2018)
(For compliance reasons, this paper is only accessible in the USA & Canada)
Eaton Vance International discusses Calvert's Four Pillars of Responsible Investing: performance, research, engagement, and impact.

Thematic Indexing, Meet Smart Beta: ESG & Factor Portfolios (SSGA, 2018)
Should ESG be incorporated as an additional factor, or used to screen the universe of potential investments? SSGA examines both approaches in an attempt to determine how best to merge ESG into factor portfolios.

Decarbonisation 2.0: A sustainable investing solution (Russell Investments, 2017)
(For compliance reasons, this paper is only accessible in the EMEA region)
This paper represents an enhancement to Russell Investments’ original decarbonisation strategy involving 3 pillars - increased exposure to renewable energy, ESG integration, and reduced coal exposure.

Sustainability Matters: Emerging ESG Risks in 4 Industries (Morningstar, 2018)
This study attempts to answer the question - is the performance of active managers relative to their index driven by the returns to their investment style?

How Asset Owners Can Craft a Long-Term Responsible Investment Strategy (PRI, 2018)
A sound investment strategy assesses sustainability issues from a long-term standpoint, taking into account the ways in which global megatrends will shape our future investment environment.

ESG Issues in Investing: A Guide for Investors (CFA Institute, 2016)
ESG has come a long way since the early days of screening companies for ethical practices. It is now thought that systematically considering ESG issues leads to better informed investment decisions and a more complete corporate analysis.

IQ Magazine Spring 2018 - Life after easy money (SSGA, 2018)
See page 44 for a case study on ESG and the way that ESG considerations can affect the process of stock selection.

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