Brendan Bradley - ESG Investing For Dummies

9 Appendix: Great Resources for ESG Investing The Basics of Building a Retail ESG Portfolio Disclosure, Reporting, and Engagement Further Asset Class Information

10 Index

11 About the Author

12 Advertisement Page

13 Connect with Dummies

14 End User License Agreement

1 Chapter 14TABLE 14-1 Comparison of the Alternative ESG Reporting Frameworks and What They ...

1 Chapter 1FIGURE 1-1: Google Trends chart — a search for “ESG Investing” over the last th...FIGURE 1-2: ESG Cube with intersections between factors. FIGURE 1-3: Industry sectors per the SASB’s Materiality Map. FIGURE 1-4: Popular ESG investment strategies. FIGURE 1-5: Material indicators per the SASB’s Materiality Map.

2 Chapter 11FIGURE 11-1: European Sustainable Fund Assets (USD billion); data as of Decembe...FIGURE 11-2: U.S. Sustainable Fund Assets (USD billion); data as of December 20...FIGURE 11-3: Asia ex-Japan Sustainable Fund Assets (USD billion); data as of De...

1 Cover

2 Title Page

3 Copyright

4 Table of Contents

5 Begin Reading

6 Index

7 About the Author

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Welcome to the ESG community! Thanks for picking up this book, in which I explain the ins and outs of ESG investing. As you may know, ESG stands for environmental, social, and governance, and perhaps the reason for your interest is the growing evidence that ESG factors can be integrated into investment analysis and portfolio construction to offer investors long-term performance advantages. Also, ESG criteria are used by socially conscious investors to screen investments and assess a company’s impact on the world. You want to know that the companies you’re investing in are “doing the right thing” or “doing no harm” as well as producing a positive return on investment.

With growing action from governments, companies, and investors to consider environmental and societal impacts, it seems inevitable that ESG considerations will be included in all of our investment decisions at some point in the future. Given that companies with high ESG ratings exhibit a lower cost of capital, less volatile earnings, and lower market risk than companies with low ESG ratings, sustainability should be our new standard for investing. Furthermore, all collective investment funds may be compelled to consider ESG criteria in their investments, alongside traditional financial factors.

However, be aware that there are many challenges to surmount before you reach the “promised land.” There is still a lack of common sustainability criteria, standardization of disclosure requirements, and therefore ESG ratings that can be questioned from a multitude of different rating providers. In short, the available data and the methodology behind ESG criteria for investment products is still opaque, and investors should carefully monitor what’s “under the hood” and not be victims of “greenwashing.”

In writing this book, my primary aim is to educate potential ESG investors about the opportunities, but not to forget the potential risks. Many ESG-related books have been written, but the landscape has changed so much in just the last year that I felt there was a need to update investors, and also to be wary of the hype and not get caught up in the fear of missing out. So I focus in certain chapters on the developments around improvements in disclosure, leading to better data quality and more informed ratings of given companies, which in turn leads to better investment products. While the asset management industry is focused on voluntarily reaching these goals, given the “wall of investment” flowing into this space, there will also be increasing regulatory requirements to mandate behavior.