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Practical ESG and Impact Investing

Navigating the road to a sustainable future

Our latest ESG roundup presents a selection of white papers that explore the nuts and bolts of ESG and impact investing. The focus is on practical solutions to issues encountered by investors on the road to delivering sustainable outcomes.

Within our featured papers, FTSE Russell shows how to identify and isolate some of the factors that can unwittingly bias ESG scores, while Nuveen describes a practical, six-step framework for implementing impact investing for a commercial real estate investment portfolio.

 

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FEATURED PAPERS


Successful Impact Investing in Real Estate (Nuveen, 2020)

With the help of a case study, the authors present a practical, six-step process for implementing an impact investing framework for real estate.

Factor Control: Isolating specific biases in ESG ratings (FTSE Russell, 2020)

The assessment of ESG scores can be complicated by external biases such as size, country and activity. In this paper, FTSE Russell analyses these bias factors and explains how to isolate the factor-driven element from the company-specific element of a score.


PRACTICAL ESG INVESTING


Video: Building a sustainable core using an ESG index (S&P Dow Jones Indices)

In this video, S&P Dow Jones Indices examines how investors can use ESG indices to express their ESG values.

Indexing: Sustainable, simplified (iShares, 2020)

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

This presentation from iShares puts forward the arguments for investors to use ETFs, or an indexed approach, as a means to achieving sustainable outcomes.

What to Look for on the Road to ESG (Intech)

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

Intech discusses some of the bumps in the road that investors may need to navigate on the road to ESG. This includes the possibility of 'ESG Research Bias' in the form of size, country, and industry factors.

Why Sustainability Matters (First Sentier, 2020)

For compliance reasons, this paper is only accessible in the EMEA region

What are some of the key ESG issues affecting listed infrastructure? This paper by First Sentier examines them. It also explores why it is vital that investors keep sustainability factors at the centre of their thinking when investing in the asset class.

An Update on our ESG Scores (Franklin Templeton, Nov 2020)

For compliance reasons, this paper is only accessible in the EMEA region

In 2018, Templeton Global Macro (TGM) released its original paper on the topic of ESG factors in sovereign fixed income investing. The paper explored the team’s novel approach to ESG investing, which does not merely measure current ESG levels as a screen, but instead focuses on projected changes in ESG scores that can reveal opportunities for investment as well as risks to avoid. TGM had been conducting similar research on the effects of governance and social factors on macroeconomic conditions for decades. However, the 2018 paper was the first time those insights were publicly codified into an ESG scoring system.


PRACTICAL IMPACT INVESTING


Impact Investing: Dual-purpose investing (Candriam, 2020)

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

In this 20-page document, Candriam explains the philosophy behind impact investing, its goals, the implications for investment returns, and the practical nuts and bolts.

Four Stages of Impact Reporting (NN Investment Partners, 2020)

How can managers measure the impact of their investing actions? In this six-page report, NN IP presents a framework with four sections, covering SDGs, 'true value', quantity of impact, and quality of impact.

Impact Investing Market Map (PRI)

This report by PRI presents a detailed exploration of the impact investing world and the environmental and social concerns at its core.


FROM EXCLUSION TO SHORTING


Exclusions May Simply Be Transferring a Problem (Robeco, 2020)

Robeco examines the efficacy of exclusion screening as an approach for ESG investors. Does it work, or simply pass the buck?

The Big Green Short (Man Group, 2020)

For those who favour an exclusion approach, Man Group presents a logical extension; rather than merely excluding a stock, why not short it?

 

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