Considerations on ESG Investment Implementation

Starks, Laura

doi:10.29338/ph2022-07

Journal Article

Considerations on ESG Investment Implementation

Abstract: Although interest in investing according to environmental, social, and corporate governance (ESG) standards is widespread, investment managers face a number of basic considerations with their portfolio choices. In this article, I give a high-level overview of these considerations within the context of the investor motivation: ESG values, ESG value, or both. These considerations include whether investors should exclude certain firms or use a positive tilt; how they could integrate ESG into an investment approach; the role of third-party ESG ratings; how they should measure and report their portfolios' ESG qualities; and what evidence shows about whether integrating ESG principles or engaging firm management on ESG issues affects portfolio financial performance.

Keywords: corporate social responsibility; ESG investing; ESG values; ESG value; investment portfolio; sustainably responsible investing;

JEL Classification: G11; G19;

https://doi.org/10.29338/ph2022-07