Chapter 14
Defining and Measuring ESG Performance and Reporting
IN THIS CHAPTER
Studying criteria and metrics
Figuring out relative ESG performance
Reviewing ratings and rankings
Building frameworks for reporting
Reports and studies from a range of sources, from academics to investment banks, continue to reveal that portfolios based on investing in companies with high ESG metrics would have beaten the broader market by impressive amounts every year for the last five to ten years! In response, databases with countless ESG indicators exposing numerous corporate attributes have sprung up, suggesting that a targeted approach to both understanding and utilizing ESG data is necessary. Given the large number of ESG indicators, investors have tended to outsource their requirements in order to improve their assessment.
While many rating agencies provide a single ESG score for an individual security, comprising a composite of different individual factors, using such metrics to assess a single holding or a given portfolio indirectly presumes a shared set of ESG values across investors. However, ...
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