ESG Improvers: Investing in Companies Boosting Sustainability

Sep 10, 2024 · Between 2018 and 2023, sustainability funds reduced their holdings in traditional energy companies to 1.8% of holdings from 3.7%—less than half that of traditional funds. More than $7 trillion, or 13% of global assets under management (AUM), is in funds that screen out …

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ESG Improvers: Investing In Companies Boosting Sustainability

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ESG Scores: Strategies For Companies To Enhance Sustainability

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FAQs about ESG Improvers: Investing in Companies Boosting Sustainability Coupon?

Are ESG improvers a good investment?

Right now, they would screen negatively on classic ESG metrics, such as carbon intensity. However, these “ESG improvers” may be positioned to deliver superior stock returns and play a critical role in the transition to clean energy by reducing consumer energy costs, cutting carbon emissions and improving utility earnings-per-share growth. ...

Should you invest in sustainable improvers (ESG momentum)?

Universe: MSCI ACWI As early as 2015, an MSCI study showed that Sustainable Improvers (ESG Momentum) outperformed ‘best in class’ ESG Companies (ESG Tilt) from 2007 through 2015. This independent study reinforces the potential of this investment opportunity. ...

Should companies improve their ESG profile in the future?

As such, there is an investment opportunity in identifying companies which should improve their ESG profile in the future and it’s this improvement potential that we believe is underappreciated by the market. These sustainable improvers are companies that are taking real steps in addressing ESG risks and opportunities to improve their ESG profile. ...

Are ESG funds a woke investment?

While some critics condemn ESG funds as “woke” investing, regular investors’ appetites remain strong for these funds, which consider the environmental, social and governance factors of a portfolio’s companies along with the companies’ financial fundamentals. ...

Who should invest in ESG?

Investors who focus strictly on the economic impact of ESG initiatives, particularly on cash flows and value creation. For example, these investors might avoid oil and gas companies with a higher chance of having stranded assets, or real estate companies with a greater risk of having their properties flooded based on the assets’ geography. ...

Why is ESG incorporation important?

ESG incorporation may no longer be a differentiator for investors, but rather a standard input for consideration in the investment decision-making process. Also, regulators around the globe may follow in the footsteps of the EU and require categorization of all funds to help investors more easily determine the level of ESG incorporation. ...