The financial community believes that ESG factors have a decisive impact on risks and returns. Companies with excellent ESG performance can significantly reduce company-specific risks, have a positive impact on reputation, increase customer stickiness, improve company operations, and improve financial performance. In an extreme decline environment Increase the ability to resist risks.
From this, the ESG investment method was derived.
1. Investment method:
(1) Positive screening and negative elimination. Select those sectors and companies whose ESG factors are higher than the average level of the same category, and exclude companies that have negative effects and unacceptable effects on ESG indicators;
(2) Take the ESG factor as a dimension to evaluate the company and integrate it into traditional fundamental analysis and other models;
(3) Select specific sustainable development entities to invest.
This investment method can be used only after a few adjustments to the original conventional investment method. Generally speaking, investors first set environmental / social issues with related stakeholders (see Kerry Group ’s exploded view), and then establish financial and non-financial goals with standardized formulas or evaluation methods to determine the final investment goals .
2. The source of ESG screening: the sustainable development / corporate social responsibility (CSR) report can reflect the ESG status of the company. Whether the company has prepared the non-financial information report, whether it has quantified and compared ESG activities, can display Whether the company has the willingness to communicate with stakeholders is the basis for measuring whether corporate governance is perfect.
Only a thorough study of the various possible countermeasures of the stakeholders involved in the enterprise is relatively complete corporate governance.
