Floris Lambrechtsen (The Netherlands)
Managing Partner - Double Dividend B.V.
From Policy to Portfolio - What is ESG integration?
What is ESG integration?
Integrating RI/ESG thinking into the investment process at all levels – philosophy, research, portfolio construction – versus removing from further consideration in the investment process possible investments which do not meet specified criteria related to ESG (negative screening).
Different philosophies might lead to different integration strategies: Adding value to portfolio’s by managing risks and seizing opportunities, ethical conviction, combination.
- External dataprovider versus internal analysis.
- Availability of relevant information on all asset classes.
- Inclusion in ALM,
- Top down thematic across all asset classes,
- Bottom up in investment analysis at portfolio level.
Internal: improving knowledge and motivation portfolio managers. Check on compliance.
External: how to assess your managers performance in integrating ESG issues? Double Dividend managers screening tool. Portfolio monitoring and due diligence: audits.
Dilemma’s and challenges:
- Fiduciary duty,
- Materiality and financial performance,
- Long term versus short term investment horizon,
- Raising awareness and motivating portfoliomanagers,
- Support from top level management is needed to be able to incentivise and integrate.