In the past, environmental, social and governance (ESG) considerations were often used as overlays in existing portfolios, i.e., as screening tools rather than as an integrated component of the investment process. The last decade has seen a shift by asset managers toward incorporating ESG concepts into their investment philosophies, with the aim of enhancing alpha generation and risk mitigation.
While some investment managers are just waking up to the idea of incorporating ESG into their investment process to meet client needs, State Street’s Fundamental Growth and Core (FGC) Equity team has a long history of integrating ESG concepts into its fundamental analysis of companies.