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Days have gone where in including ESG factors to investment decisions was considered as an option. Sustainable investing has become a important aspect of investment analysis, with BlackRock, J P Morgan and many other investment firms paving the way.

“BlackRock CEO Larry Fink says within the next 5 years all investors will measure a company's impact on society, government, and the environment to determine its worth”

In our view a proper analysis should always include a view on ESG factors, as by not including material ESG items one will likely  to make an incomplete assessment of the fair value of a company. Key is when integrating ESG factors into an investment analysis is to focus on materiality, i.e., factors that are likely to have a material impact on the (longer-term) sustainability of a company’s business model and its share price performance.

How to Integrate ESG In Investment Decision?

Positive/ Best-In-Class Screening

Our Best-in-class screening process has a robust ESG screening template which overlays ESG performance factors on a selected portfolio of stocks to determine the risk and lapse in companies and also highlighting operational excellence in terms of reducing Carbon footprints and other social and governance factors.

These careful evaluation and ESG rating of the investment portfolio will provide investors a clear understand of the risks and benefits associated to it.

ESG Scenario Analysis to Understand Long Term Impact

ESG Scenario Analysis is an important assessment which provides clear understanding on the climate change risk involved in a particular portfolio.

The analysis can be specific to industries ranging from Oil and Gas, Manufacturing to technology companies.

Negative or Exclusionary Screening

Exclusionary screening recommends avoiding  exposure to organizations who are into businesses such as Armaments, Alcohol, Tobacco and fossil fuels.  Exclusionary screening can also be region specific such as Sharia investment principles and USCCB catholic guidelines.

Norms-Based screening

While screening portfolios for financial and ESG risks it is also important to see if the companies are enforcing policies relating to key societal and environmental issues, along with it how efficiently is the company following regional and international standards and norms. Few prominent norms are : UN Global Compact, OECD and ILO .