Chapter 10
Exploring Derivative and Alternative Instruments
IN THIS CHAPTER
Earning passive returns with ESG indexes
Focusing on ESG in alternative assets
Looking at illiquid assets
Investigating “traditional” ESG
Responsible investment and ESG have traditionally been biased toward liquid assets such as equities (see Chapter 8) and bonds (see Chapter 9). There are several reasons for this, including the weight of assets under management, the availability of information, and the rights and access provided to shareholders. However, more recently, the importance of ensuring that ESG factors are embedded within alternative asset classes has risen in importance. This is primarily due to a reallocation of assets among pension funds toward alternative solutions, and a recognition that more illiquid assets, by definition, have longer-term investment horizons and are thus arguably more exposed to ESG risks. This issue has gained even greater significance with the focus on blended finance (an approach aimed at attracting capital toward projects that benefit society while providing financial ...
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