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Portfolio management: ESG criteria

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Responsible investment that includes ESG criteria has grown significantly in recent years. According to Morningstar figures, sustainable investment funds attracted $51.1 billion in net inflows in 2020, up 28% on 2019.

This trend can be explained by a growing awareness of environmental and social issues, but also by very attractive financial performances.

A study by the Institute for Sustainable Business Development shows that over 10 years, a portfolio incorporating ESG criteria outperformed a conventional portfolio by 6.6%.

Some criteria often taken into consideration when selecting ESG investments

Several ESG investment strategies are used by investors:

The exclusion

This involves the exclusion of certain controversial sectors such as tobacco, arms, fossil fuels and so on. According to Novethic, 88% of responsible investment funds apply exclusion filters.

ESG selection

The aim is to select the best-rated companies in terms of ESG criteria, through in-depth analysis and rating. According to Eurosif, this approach accounts for 49% of assets under responsible management in Europe.

Thematic investment

We target business sectors that contribute to the ecological and social transition: renewable energies, circular economy, access to healthcare, etc. 26% of European responsible assets are invested in these themes.

A few figures to illustrate ESG investments outperformance

  • The MSCI World ESG Leaders index has outperformed the MSCI World index by 3.3% p.a. over 10 years.
  • 63% of large ESG equity funds outperformed their benchmarks in 2020 (Natixis IM).

By diversifying across different asset classes (equities, bonds, real estate) while taking ESG criteria into account, it is entirely possible to build a high-performance portfolio aligned with your values.

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