ESG integration aims to improve financial performance and/or mitigate financial risk. It involves considering ESG factors explicitly and systematically in investment analysis and decisions to lower risk and generate returns.
It is not about achieving particular environmental, social, or governance goals. It’s about looking at the whole investment picture and considering material ESG components as a driver of risk and/or return.
From a fiduciary perspective, ESG integration should take into account all financially material risks and opportunities that arise out of ESG information. Integrating ESG into your investment decision is an important element in achieving superior long-term compounding benefits.