The Elements of ESG - enhancing value in a sustainable world

4 October 2018
| By partnerarticle |
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We take an active and highly engaged approach to ESG across asset classes. Discover why the elements of ESG should be at the heart of your investment portfolios

 

Chemistry, unlike other sciences, sprang originally from delusions and superstitions, and was at its commencement exactly on a par with magic and astrology. 
Thomas Thomson, Scottish chemist, 1773-1852

 

Although it wasn’t until the 16th century that chemistry began to separate itself from its predecessor, alchemy, its origins date back to the beginning of humanity. Chemists began using the scientific method to conduct experiments and prove the validity of various theories. Today, this branch of science is firmly established alongside physics, biology and other “hard” sciences.

Like chemistry, environmental, social and governance (ESG) concerns have been part of our collective psyche for millennia. But while chemistry includes the study of the elements that make up matter, ESG studies material risks and opportunities that matter for potential investments. But how does one define ESG? And how does the identification of material ESG risks alongside other risks (such as financial risks) support the achievement of long-term investment objectives?

It’s time to put aside delusions and superstitions and instead focus on the very real ways ESG investing can help investors, asset managers and individual companies align their interests to create a better portfolio and, ultimately, a better world. As we become more familiar with the elements of ESG, we will learn what differentiates ESG from other types of stewardship, the trends driving the adoption of ESG principles in investment strategies and what investors should look for in an ESG-focused manager.

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