RT Journal Article
SR Electronic
T1 Consistent ESG through ESG Benchmarks
JF The Journal of Index Investing
FD Institutional Investor Journals
SP 24
OP 42
DO 10.3905/jii.2019.1.072
VO 10
IS 2
A1 Guido Giese
A1 Linda-Eling Lee
A1 Dimitris Melas
A1 Zoltán Nagy
A1 Laura Nishikawa
YR 2019
UL https://pm-research.com/content/10/2/24.abstract
AB There has been a wide range of research in academia and the asset management industry about the financial benefits of ESG investing. However, the equally important question about how to achieve consistency when integrating ESG and what methodologies to use has not received the same level of attention. As a result, ESG integration is often applied inconsistently and incompletely across portfolios. The authors provide a framework for the integration of ESG into benchmarks at various strategic levels—from the top policy benchmark level to the performance benchmark of individual allocations. In addition, they highlight the different investment objectives that asset owners may pursue when integrating ESG and how they can reflect these in their choice of ESG benchmarks. They find that integrating ESG into benchmarks makes sense as a framework to achieve consistency because benchmarks are not only used at different strategic levels but also across all areas of asset management—index-based, factor-based, and active management—to define the underlying investable universe and to provide a yardstick for performance.TOPICS: ESG investing, analysis of individual factors/risk premia, portfolio construction, performance measurement