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Aside from being a rigorous, transparent and cost-effective approach, indexing allows investors to tackle global sustainability challenges at scale.
Yet, misunderstandings persist around what sustainability-minded investors can achieve within an index approach. In ESG in Index Investing, we deconstruct five myths about this topic. |
The quality and lack of consistency of ESG data have been some of the biggest hurdles in ESG index investing. We have addressed this challenge by constructing R-Factor TM, a proprietary ESG score that not only enables us to rate and rank companies, but also to engage with them. Read more in The ESG Data Challenge. |
And last but not least, the issue of tracking error against a strategic benchmark arises in many client conversations around ESG integration. In ESG, Tracking Error and Long-Term Performance, we argue that ESG-related tracking error against traditional benchmarks will become less of a concern as investors adopt the view that ESG integration adds long-term value. This should favour increased ESG adoption.Aside from being a rigorous, transparent and cost-effective approach, indexing allows investors to tackle global sustainability challenges at scale.