As sustainability has emerged as a major investment trend in recent years, this chapter explores how fund managers integrate ESG information into active fund management. Drawing from interviews with experts in the fund industry, we find that fund managers employ a range of ESG integration strategies—from disregarding ESG factors or applying negative screening to implementing proprietary screening models. Somewhat surprisingly, the findings indicate that ESG-focused investing remains firmly anchored in the financial value paradigm, with the primary objective of enhancing returns. Key skills in ESG-focused investing include the ability to select and validate financially material ESG information, as well as maintaining an agile investment approach, that is, balancing over- and underreaction to ESG information. Given the complexity and multidimensional nature of ESG information, fund managers rely on a combination of intuition and analysis in order to interpret and act upon it effectively.

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Integrating ESG Information in Active Fund Management

  • Katarzyna Cieslak,
  • Inna Neskorodieva,
  • Fredrik Nilsson

摘要

As sustainability has emerged as a major investment trend in recent years, this chapter explores how fund managers integrate ESG information into active fund management. Drawing from interviews with experts in the fund industry, we find that fund managers employ a range of ESG integration strategies—from disregarding ESG factors or applying negative screening to implementing proprietary screening models. Somewhat surprisingly, the findings indicate that ESG-focused investing remains firmly anchored in the financial value paradigm, with the primary objective of enhancing returns. Key skills in ESG-focused investing include the ability to select and validate financially material ESG information, as well as maintaining an agile investment approach, that is, balancing over- and underreaction to ESG information. Given the complexity and multidimensional nature of ESG information, fund managers rely on a combination of intuition and analysis in order to interpret and act upon it effectively.