There are various methods used by sustainability funds to integrate environmental, social and governance (ESG) criteria into their investment portfolio. Most rely on a combination of methods to select sustainability leaders and to exclude unsustainable activities.
We use the three main categories below to characterize the approaches used by the funds:
Funds that do not invest in companies (or entire sectors) whose practices or products are considered controversial or unsustainable or in breach of international norms and conventions (norms-based screening).
Funds that primarily invest in companies identified as having a superior sustainable performance. Consideration of ESG factors into the traditional financial analysis or best-in-class portfolio constructions are the most common processes used.
Funds that primarily invest in companies whose products and services deliver environmental or social solutions and benefits. The most common themes are: water, renewable energy, waste, climate change, resources (agriculture, timber).
Each fund is assigned to a single Sustainability Strategy, making it easy for the user to find a fund corresponding to its needs.
A detailed description of all the Sustainability Strategies can be found in the Glossary.