ESG is increasingly important for all investors. However, Investors tell us they are not willing to sacrifice primary objectives such as liquidity or performance to incorporate ESG. They also recognize that exclusionary screening is not the only way to implement an ESG strategy.
Better overall results can be achieved by ESG-scoring industries or companies and then tilting the portfolio towards those with higher scores.
In our latest discussion we explore how to do ESG investing right, the importance of the European SFDR requirements and how we incorporate ESG into our portfolios specifically for our Dublin based money market funds.
Released on a monthly basis, download our latest fund document showing investors the ESG profile for the fund. Giving ESG investors the opportunity to integrate financially material ESG data using our proprietary ESG ratings methodology R-Factor™.
Please note that above links are for Distributor Shares share class. If you wish to view other available share classes, please visit our fund pages.
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Responsible-Factor (R Factor) scoring is designed by State Street to reflect certain ESG characteristics and does not represent investment performance. Results generated out of the scoring model is based on sustainability and corporate governance dimensions of a scored entity.
The returns on a portfolio of securities which exclude companies that do not meet the portfolio's specified ESG criteria may trail the returns on a portfolio of securities which include such companies. A portfolio's ESG criteria may result in the portfolio investing in industry sectors or securities which underperform the market as a whole.
Equity securities may fluctuate in value and can decline significantly in response to the activities of individual companies and general market and economic conditions.
R-Factor™ is an ESG scoring system that leverages commonly accepted transparent materiality frameworks that are supported by a large group of companies and investors to generate a unique ESG score for listed companies. The score is powered by ESG data from four different providers (Sustainalytics, ISS-Oekom, Vigeo-EIRIS, and ISS-Governance), in order to improve overall coverage and remove biases inherent in existing scoring methodologies. R-Factor™ is designed to put companies in the driver's seat to help create sustainable markets.
R-Factor™ Scores are comparable across industries. The ESG and Corporate Governance (CorpGov) scores are designed to be based on issues that are material to a company's industry and regulatory region. A uniform grading scale allows for interpretation of the final company level score to allow for comparison across companies.
The R-Factor™ scoring process comprises two underlying components. The first component is based on the framework published by the Sustainability Accounting Standards Board ("SASB"), which is used for all ESG aspects of the score other than those relating to corporate governance issues. The SASB framework attempts to identify ESG risks that are financially material to the issuer-based on its industry classification. This component of the R-Factor™ score is determined using only those metrics from the ESG data providers that specifically address ESG risks identified by the SASB framework as being financially material to the issuer-based on its industry classification.
The second component of the score, the CorpGov score, is generated using region-specific corporate governance codes developed by investors or regulators. The governance codes describe minimum corporate governance expectations of a particular region and typically address topics such as shareholder rights, board independence and executive compensation. This component of the R-Factor™ uses data provided by ISS Governance to assign a governance score to issuers according to these governance codes.
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