Sustainable investing...but how?

We consider various ways of implementing ESG criteria in a portfolio and explain why the effort may be worth it

Jan 19, 2018 | Manuela von Ditfurth and Dr. Martin Kolrep

Ever more investors want their investments to be sustainable. But which of the many methods is the best? We present various approaches to sustainable investing. One method is based on the widespread best-in-class concept. This involves selecting the sector sustainability leaders to assure a degree of portfolio diversification that would not be possible if the focus is solely on the environmental sector.

Anyone keen to invest in accordance with ESG criteria will need to answer two fundamental questions at some stage in time – how can ESG information on companies be obtained and processed, and how should the results be applied in a portfolio. We believe that a distinction must be made between two potential approaches.

Which approach to choose also depends on each investor's individual goals. But one thing is certain: the old theory that sustainability is only possible at the expense of performance does not hold true.

 

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