When making investment choices, a company’s adherence to ESG principles is one that we believe is becoming increasingly relevant in today’s climate. Our research shows that companies which exhibit these principles not only historically outperform ones that do not incorporate them into the company’s DNA, but may experience less downside risk also.

Investors are looking more and more at adopting strategies which combine these new ESG tenets with existing methods of identifying attractive investment opportunities. Being a still evolving field, there is no well-defined process to best construct ESG portfolios which optimally combine profit-maximizing characteristics with ESG ones, all the while being mindful of client-specific requirements. At PanAgora, we believe an optimal approach to building ESG portfolios exists. An ESG portfolio can be constructed in a systematic way, with both traditional and ESG factors integrated in a manner that seeks to maximize performance based on objective measures. This may result in a portfolio which delivers alpha with ESG benefits that may accomplish both the return objectives and the values of the asset owner.

(more…)