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Sustainable Investment Strategies in PracticeExploring strategy combination to achieve investment objectivesTyler RobinsonSupervisorPhilip Peck &Davide ManeschiThesis for the fulfilment of theMaster of Science in Environmental Management and PolicyLund, Sweden, September 2019? You may use the contents of the IIIEE publications for informational purposes only. You may not copy, lend, hire, transmit or redistribute these materials for commercial purposes or for compensation of any kind without written permission from IIIEE. When using IIIEE material you must include the following copyright notice: ‘Copyright ? Tyler Robinson, IIIEE, Lund University. All rights reserved’ in any copy that you make in a clearly visible position. You may not modify the materials without the permission of the author.Published in 2019 by IIIEE, Lund University, P.O. Box 196, S-221 00 LUND, Sweden,Tel: +46 – 46 222 02 00, Fax: +46 – 46 222 02 10, e-mail: iiiee@iiiee.lu.se.ISSN 1401-9191AcknowledgementsThis thesis and the EMP programme in general represented an opportunity for me to transition my career towards my passion of contributing to climate change solutions. I am grateful for the chance to immerse myself in the rich learning environment that this research created and the ability to have a meaningful impact in creating positive change moving forward. First, I would like to thank my supervisors Philip Peck and Davide Maneschi for their guidance. I was lucky to have two very qualified supervisors who brought their own unique background and perspective to the process as they provided valuable feedback. I would also like to thank Beatrice Kogg for her direction and advice early on in the process of framing the research. I had the privilege to engage with a number of sustainable investment professionals throughout this process and so I would like to thank each one of them for their contributions to this thesis. This research would not have been possible without the time they took to share their expertise and experience. To Rachel, I can’t thank you enough for being my rock, my unwavering support no matter where we are in the world. You’re the person I always want to be with to weather the lows and celebrate the highs. Finally, I’d like to thank everyone at the IIIEE institute. From the students who will be lifelong friends to the staff that made this journey an enjoyable and challenging learning experience. This has been an inspiring chapter that will have a lasting impact on my life. AbstractSociety faces significant funding gaps as it attempts to address crucial social and environmental challenges. One of the key barriers inhibiting the allocation of private capital to alleviate these funding needs is a lack of established methods regarding how investment practitioners can integrate sustainability considerations into investment processes. This thesis analyses how sustainable investment strategies are combined in practice, with the objective of providing investment practitioners sustainable investment strategy integration guidance. The research applies qualitative content analysis and practitioner interviews to answer the research questions of (RQ1) how strategies are combined and (RQ2) how investment practitioners plan to improve their sustainable investment practices. A case study based approach was chosen since it is effective in examining a complex unit of analysis such as a sustainable investment processes. The analysis revealed that investment practitioners combine multiple complementary sustainable investment practices in the pursuit of primary objectives such as alignment of a portfolio with values/norms, improvement of risk/return profiles, or the maximisation of social/environmental impact. Evidence also emerged that created a strong case to challenge the literature’s existing sustainable investment spectrum conceptual model. The work delivers a new conceptual model that reflects the information gathered and the feedback from investment practitioner interviewees that was used to answer RQ1 and RQ2. The thesis concludes that sustainable investment practitioners do indeed combine multiple strategies to achieve their objectives and a new conceptual model is necessary to account for strategy combination choices throughout the investment process. The conclusions have implications for institutional sustainable investment practitioners who could use the research findings and new conceptual model to guide the integration of sustainable investment strategies into their investment process. Finally, the thesis outlines a number of areas where future research may be beneficial, including the development of best practices for integrating sustainable investment strategies, optimal strategy combinations for different objectives, and measuring the impact of sustainable investment strategies. These future research areas can be helpful in scrutinising the findings from this thesis and supporting its overarching objective of assisting the transition to a more sustainable finance industry. Keywords: Sustainable investment strategies, investment objectives, ESG performance, financial performance, sustainable investment spectrumExecutive SummaryThis thesis explores how sustainable investment strategies are deployed in practice by engaging with investment practitioners. Specifically, it examines how sustainable investment strategies are combined to form a cohesive investment due diligence process that optimises for an investment objective. Problem Definition & ObjectiveSociety faces significant social and environmental challenges that have large funding gaps. This includes US$5-7 trillion annually between 2015-2030 that is needed to achieve the Sustainable Development Goals (SDGs), and a six times increase in energy efficiency and low-carbon technologies considered necessary to keep temperatures from increasing beyond the key climate change threshold of 1.5°C. Private sector investments and the US$289 trillion in assets under management (AUM), represents a potential solution to these funding gaps, if investment practitioners allocate capital with social and environmental considerations integrated into their investment process. There are some mixed conclusions about the correlation between sustainable investment considerations and financial performance especially when factors such as materiality and timeframe are considered; however, in general there is a significant amount of literature that indicates a positive correlation. Despite this positive correlation, sustainable investment practices have not been rapidly adopted. In fact, only 37% of investment professionals consider extra-financial data, and the sophistication and extent with which this data is incorporated into investment processes is often limited. Preliminary literature review research and exploratory interviews suggested that a key barrier inhibiting the adoption of sustainable investment practices is the lack of expertise and guidance in integrating sustainable investment strategies. In particular, a PRI report highlights the need expressed by investment practitioners to better understand how to integrate extra-financial considerations ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Orsagh","given":"Matt","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Allen","given":"James","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Sloggett","given":"Justin","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Georgieva","given":"Anna","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bartholdy","given":"Sofia","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Douma","given":"Kris","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"177","title":"Guidance and Case Studies for Esg Integration: Equities and Fixed Income","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Orsagh et al., 2018)","plainTextFormattedCitation":"(Orsagh et al., 2018)","previouslyFormattedCitation":"(Orsagh et al., 2018)"},"properties":{"noteIndex":0},"schema":""}(Orsagh et al., 2018). Sustainable investment strategies are a key mechanism with which investment practitioners can incorporate extra-financial information into their investment process and the main strategies utilised are negative screening, best-in-class, integrated ESG analysis, active ownership, thematic investing, and impact investing. The lack of sustainable investment integration expertise could be due in part to the lack of research in this field. More specifically, there is a research gap in the area of how multiple sustainable investment strategies can be combined to pursue investment objectives. The investment objectives and the appropriate strategies for achieving them needs more clarity ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2139/ssrn.2925310","abstract":"Using survey data from a sample of senior investment professionals from mainstream (i.e. not SRI funds) investment organizations we provide insights into why and how investors use reported environmental, social and governance (ESG) information. The primary reason survey respondents consider ESG information in investment decisions is because they consider it financially material to investment performance. ESG information is perceived to provide information primarily about risk rather than a company's competitive positioning. There is no one size fits all, with the financial materiality of different ESG issues varying across sectors. Lack of comparability due to the lack of reporting standards is the primary impediment to the use of ESG information. Most frequently, the information is used to screen companies with the most often used method being negative screening. However, negative screening is perceived as the least investment beneficial while full integration into stock valuation and positive screening considered more beneficial. Respondents expect negative screening to be used less in the future, while positive screening and active ownership to be used more.","author":[{"dropping-particle":"","family":"Amel-Zadeh","given":"Amir","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Serafeim","given":"George","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"SSRN Electronic Journal","id":"ITEM-1","issued":{"date-parts":[["2017"]]},"page":"87-104","title":"Why and How Investors Use ESG Information: Evidence from a Global Survey","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amel-Zadeh & Serafeim, 2017)","plainTextFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)","previouslyFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)"},"properties":{"noteIndex":0},"schema":""}(Amel-Zadeh & Serafeim, 2017). Furthermore, the existing sustainable investment spectrum conceptual model that provides guidance to investment practitioners may not accurately reflect sustainable investment practices and therefore there is an opportunity to challenge its assumptions and propose an improved version. Considering this problem and research gap, the objective of this thesis is to accelerate the transition towards a more sustainable financial system by providing knowledge to assist sustainable investment practitioners in further understanding and integrating sustainable investment strategies into their investment processes.Approach To accomplish the thesis objective, the research is structured around two main research questions and associated hypotheses. The research questions and hypotheses were developed throughout the literature review and the initial exploratory interviews. RQ1: How do market rate return equity investment practitioners combine sustainable investment strategies within their investment process? H1: Many investors don’t use a single sustainable investment strategy and are not easily defined by one subcategory of the sustainable investment spectrum. Instead, they combine multiple strategies to meet mixed objectives. RQ2: How do market rate return equity investment practitioners plan to improve their sustainable investment practices? H2: Investment practitioners will increasingly use a collection of sustainable investment strategies to optimise security selection and achieve financial and non-financial objectives. The research is also highly influenced by the literature’s sustainable investment spectrum conceptual model. While this conceptual model is used to inform the research questions and interview questions, it is also challenged towards the end of the thesis based on the research findings. The aim of this approach is to refine the conceptual model into a version that provides a better understanding of the range of strategies and how they can be integrated to meet the financial and non-financial objectives of investment professionals. The methodological choices of this research resulted in a case study based approach that was well suited to uncover nuanced details of investment processes that could at times include proprietary and/or sensitive information. Case study research was pursued since this study was focused on examining complex processes, with the unit of analysis being a firm’s investment process. The analysis was qualitative in nature, using content analysis to uncover trends. Triangulation of data sources was achieved by using a literature review, practitioner interviews, and firm specific document analysis. This resulted in more verifiable findings that could result in deeper insights. Findings & ConclusionsThe findings regarding RQ1 revealed that the firms engaged combined multiple sustainable investment strategies into their investment process. In fact, each firm deployed a minimum of three sustainable investment strategies. The findings showed that sustainable investment practitioners are not easily categorised by a single sustainable investment strategy. This aligned with H1, which was developed primarily from the initial exploratory interviews. The findings also revealed that investment firms usually combine strategies in the pursuit of a primary objective. The three main categories of objectives included aligning a portfolio with values/norms, improving the risk/return profile, and maximising social/environmental impact.RQ2 findings revealed a range of answers regarding the areas of focus for improving sustainable investment practices in the future. These improvement focus areas identified were quite different from the anticipated findings based on H2. The initial hypothesis was based upon the expectation that investment practitioners would increasingly use a collection of sustainable investment strategies. This in turn was based upon feedback from initial exploratory interviews with investment practitioners and sustainable investment service providers. While the investment firms engaged all used a combination of sustainable investment strategies, none of them indicated that they had plans to combine more strategies together. One trend that did emerge was that many firms were striving to focus on improving post-investment activities. This was primarily in the form of expanding active ownership initiatives by enhancing portfolio company engagement. Another trend showed that the majority of firms are looking to increase their collaboration efforts with other industry stakeholders. The objective with these initiatives is to learn from and share best practices with others and to participate in the evolution of the industry by engaging with standards and regulatory bodies. These activities appear to be related to saving costs by working together in areas that do not pose competitive advantage issues.While collecting information to address RQ1 and RQ2, evidence was found that suggested that the literature’s existing conceptual model is not representative of the deployment of sustainable investment strategies in practice. Findings showed that sustainable investment practitioners are deploying strategies from an objective centric approach instead of a strategy centric approach as implied by the conceptual model. This results in investors first agreeing upon a primary sustainable investment objective and then seeking sustainable investment strategies that are best suited to achieve that objective. Another finding that challenges the literature’s conceptual model is that investment practitioners combine multiple sustainable investment strategies to achieve their objective(s). This is contrary to the existing conceptual model which silos investment firms based on a single sustainable investment strategy. Finally, investment practitioners expressed their desired to learn from collaboration and use guidance that is representative of other industry professional’s activities. This evidence provided a strong case for this author to challenge the conceptual model and develop a new model that incorporates these findings. The result was a proposed conceptual model that is objective centric, outlines common sustainable investment strategy combinations, recognises the placement of sustainable investment strategies within the different phases of the investment process, and is based on the practices of investment professionals. Figure STYLEREF 1 \s 0 SEQ Figure \* ARABIC \s 1 1: Proposed conceptual modelThe final output of findings and the proposed conceptual model could be used to assist investment practitioners in effectively integrating sustainable investment strategies into their investment process. It can inform which strategies are appropriate depending on the investor’s primary sustainability objective, and it presents which phase within the investment process the strategies are executed within. Based on the findings from this research it is in alignment with how practitioners are investing and therefore has the potential to provide guidance to other investors who are striving to integrate sustainable investment strategies. While there have been some encouraging trends in sustainable investment strategy adoption, there is still a significant portion of the finance industry that does not consider extra-financial information. Even the firms that do incorporate this dimension have indicated that sustainable investing is still early in its evolution and they have plans to improve their practices. Therefore, in order to support the field of sustainable investing there are a number of areas where future research may be beneficial, including the development of best practices for integrating sustainable investment strategies, discovering optimal strategy combinations for different objectives, and measuring the impact of sustainable investment strategies. If further research can play a role in encouraging and guiding sustainable investment practitioners in integrating sustainable investment practices more effectively, then it could accelerate the transition to a more sustainable finance industry. Table of Contents TOC \o "1-3" \h \z Acknowledgements PAGEREF _Toc20298274 \h 1Abstract PAGEREF _Toc20298275 \h 2Executive Summary PAGEREF _Toc20298276 \h 3Problem Definition & Objective PAGEREF _Toc20298277 \h 3Approach PAGEREF _Toc20298278 \h 3Findings & Conclusions PAGEREF _Toc20298279 \h 4List of Figures PAGEREF _Toc20298280 \h 10List of Tables PAGEREF _Toc20298281 \h 10Abbreviations PAGEREF _Toc20298282 \h 11Definitions & Concepts PAGEREF _Toc20298283 \h 121Introduction PAGEREF _Toc20298284 \h 141.1Problem Definition PAGEREF _Toc20298285 \h 141.2Objective and Research Questions PAGEREF _Toc20298286 \h 151.3Scope and Limitations PAGEREF _Toc20298287 \h 161.4Ethical Considerations PAGEREF _Toc20298288 \h 171.5Audience PAGEREF _Toc20298289 \h 171.6Disposition PAGEREF _Toc20298290 \h 172Method PAGEREF _Toc20298291 \h 192.1Case Study Approach PAGEREF _Toc20298292 \h 192.2Case Study Selection PAGEREF _Toc20298293 \h 192.3Data Collection PAGEREF _Toc20298294 \h 202.3.1Literature Review PAGEREF _Toc20298295 \h 202.3.2Exploratory Practitioner Interviews PAGEREF _Toc20298296 \h 212.3.3Document Analysis PAGEREF _Toc20298297 \h 222.3.4Focused Practitioner Interviews PAGEREF _Toc20298298 \h 222.4Data Analysis PAGEREF _Toc20298299 \h 233Literature Review and Analysis PAGEREF _Toc20298300 \h 243.1Types of Strategies PAGEREF _Toc20298301 \h 243.2Adoption Trends PAGEREF _Toc20298302 \h 253.3Financial Performance PAGEREF _Toc20298303 \h 283.4Integration Challenges PAGEREF _Toc20298304 \h 293.5Motivations for Implementation PAGEREF _Toc20298305 \h 303.6Conceptual Model PAGEREF _Toc20298306 \h 313.6.1Conceptual Model Overview PAGEREF _Toc20298307 \h 314Findings PAGEREF _Toc20298308 \h 334.1Investment Firm 5 PAGEREF _Toc20298309 \h 334.1.1Overview PAGEREF _Toc20298310 \h 334.1.2Sustainable Investment Strategies PAGEREF _Toc20298311 \h 344.1.3Investment Strategy Objectives PAGEREF _Toc20298312 \h 344.1.4Plans to Improve Sustainable Investment Practices PAGEREF _Toc20298313 \h 354.2Investment Firm 6 PAGEREF _Toc20298314 \h 354.2.1Overview PAGEREF _Toc20298315 \h 354.2.2Sustainable Investment Strategies PAGEREF _Toc20298316 \h 364.2.3Investment Strategy Objectives PAGEREF _Toc20298317 \h 374.2.4Plans to Improve Sustainable Investment Practices PAGEREF _Toc20298318 \h 374.3Investment Firm 7 PAGEREF _Toc20298319 \h 374.3.1Overview PAGEREF _Toc20298320 \h 374.3.2Sustainable Investment Strategies PAGEREF _Toc20298321 \h 384.3.3Investment Strategy Objectives PAGEREF _Toc20298322 \h 394.3.4Plans to Improve Sustainable Investment Practices PAGEREF _Toc20298323 \h 394.4Investment Firm 8 PAGEREF _Toc20298324 \h 404.4.1Overview PAGEREF _Toc20298325 \h 404.4.2Sustainable Investment Strategies PAGEREF _Toc20298326 \h 404.4.3Investment Strategy Objectives PAGEREF _Toc20298327 \h 414.4.4Plans to Improve Sustainable Investment Practices PAGEREF _Toc20298328 \h 414.5Investment Firm 9 PAGEREF _Toc20298329 \h 424.5.1Overview PAGEREF _Toc20298330 \h 424.5.2Sustainable Investment Strategies PAGEREF _Toc20298331 \h 434.5.3Investment Strategy Objectives PAGEREF _Toc20298332 \h 434.5.4Plans to Improve Sustainable Investment Practices PAGEREF _Toc20298333 \h 444.6Investment Firm 10 PAGEREF _Toc20298334 \h 454.6.1Overview PAGEREF _Toc20298335 \h 454.6.2Sustainable Investment Strategies PAGEREF _Toc20298336 \h 454.6.3Investment Strategy Objectives PAGEREF _Toc20298337 \h 464.6.4Plans to Improve Sustainable Investment Practices PAGEREF _Toc20298338 \h 464.7Investment Firm 11 PAGEREF _Toc20298339 \h 474.7.1Overview PAGEREF _Toc20298340 \h 474.7.2Sustainable Investment Strategies PAGEREF _Toc20298341 \h 474.7.3Investment Strategy Objectives PAGEREF _Toc20298342 \h 484.7.4Plans to Improve Sustainable Investment Practices PAGEREF _Toc20298343 \h 494.8Investment Firm 12 PAGEREF _Toc20298344 \h 504.8.1Overview PAGEREF _Toc20298345 \h 504.8.2Sustainable Investment Strategies PAGEREF _Toc20298346 \h 504.8.3Investment Strategy Objectives PAGEREF _Toc20298347 \h 514.8.4Plans to Improve Sustainable Investment Practices PAGEREF _Toc20298348 \h 515Analysis and Discussion PAGEREF _Toc20298349 \h 535.1Analysis of Trends PAGEREF _Toc20298350 \h 535.2Addressing RQ1 PAGEREF _Toc20298351 \h 575.3Addressing RQ2 PAGEREF _Toc20298352 \h 585.4Conceptual Model Assessment PAGEREF _Toc20298353 \h 595.4.1A Case for a New Conceptual Model PAGEREF _Toc20298354 \h 595.4.2Conceptual Model Alternative PAGEREF _Toc20298355 \h 605.5Industry Implications PAGEREF _Toc20298356 \h 635.6Limitations PAGEREF _Toc20298357 \h 646Conclusions PAGEREF _Toc20298358 \h 666.1Key Conclusions PAGEREF _Toc20298359 \h 666.2Research Significance PAGEREF _Toc20298360 \h 666.3Further Research PAGEREF _Toc20298361 \h 676.4Final Reflections PAGEREF _Toc20298362 \h 68Bibliography PAGEREF _Toc20298363 \h 69Appendix PAGEREF _Toc20298364 \h 73Appendix A – Interview Guide PAGEREF _Toc20298365 \h 73Appendix B – Interview Information PAGEREF _Toc20298366 \h 75Appendix C – Industry Sustainable Investment Spectrums (Conceptual Models) PAGEREF _Toc20298367 \h 77Appendix D – Proposed Sustainable Investment Conceptual Model PAGEREF _Toc20298368 \h 81List of Figures TOC \h \z \c "Figure" Figure 01: Proposed conceptual model PAGEREF _Toc18754337 \h 6Figure 11: Investment spectrum research focus PAGEREF _Toc18754338 \h 16Figure 21: Triangulation of primary data sources PAGEREF _Toc18754339 \h 23Figure 31: Proportion of global sustainable investment assets by region PAGEREF _Toc18754340 \h 26Figure 32: Sustainable investment strategies global growth from 2016-2018 (figures in millions USD) PAGEREF _Toc18754341 \h 27Figure 33: Sustainable investment spectrum conceptual model PAGEREF _Toc18754342 \h 31Figure 51: Sustainable investment spectrum conceptual model PAGEREF _Toc18754343 \h 59Figure 52: Revised conceptual model based on findings from research PAGEREF _Toc18754344 \h 62List of Tables TOC \h \z \c "Table" Table 21. Investment Firm Selection Criteria PAGEREF _Toc18754358 \h 20Table 22: Example of investment firm overview table PAGEREF _Toc18754359 \h 22Table 41: Firm 5 overview table PAGEREF _Toc18754360 \h 33Table 42: Firm 6 overview table PAGEREF _Toc18754361 \h 35Table 43: Firm 7 overview table PAGEREF _Toc18754362 \h 37Table 44: Firm 8 overview table PAGEREF _Toc18754363 \h 40Table 45: Firm 9 overview table PAGEREF _Toc18754364 \h 42Table 46: Firm 10 overview table PAGEREF _Toc18754365 \h 45Table 47: Firm 11 overview table PAGEREF _Toc18754366 \h 47Table 48: Firm 12 overview table PAGEREF _Toc18754367 \h 50Table 51: Summary of case study findings PAGEREF _Toc18754368 \h 54Table 52: Mapping firms’ primary objective to primary and secondary sustainable investment strategies PAGEREF _Toc18754369 \h 56Table 53: Aggregated summary of investment firm’s future improvement focus PAGEREF _Toc18754370 \h 57AbbreviationsCDPCarbon Disclosure ProjectCEPCorporate Environmental PerformanceCERESCoalition for Environmentally Responsible Economies CFPCorporate Financial PerformanceCSPCorporate Social PerformanceCSRCorporate Social ResponsibilityEBITDAEarnings Before Interest Tax Depreciation and Amortization ESGEnvironmental, Social, GovernanceGIINGlobal Impact Investing NetworkGIIRSGlobal Impact Investing Rating SystemGRIGlobal Reporting InitiativeILOInternational Labour Organisation ISSInstitutional Shareholder ServicesPRIPrinciples for Responsible InvestmentSASBSustainability Accounting Standards BoardSRISocially Responsible InvestingROAReturn on AssetsROEReturn on EquityROIReturn on InvestmentROICReturn on Invested CapitalSDGs Sustainable Development GoalsTCFDTask Force on Climate-related Financial DisclosuresDefinitions & Concepts Active Ownership: Using voting and corporate engagement to influence corporate behaviour with regards to ESG issues. Additionality: Investment creates a positive impact beyond a business as usual scenario if investor had not invested. Benchmark: A suitable portfolio alternative to gauge success against. Best in Class: Investing in companies which out-perform peers on ESG criteria Concessionary Returns: Investment profit that is below the risk adjusted market rate. Environmental, Social and Governance (ESG) Performance: The paper will treat this phrase as an overarching term that indicates social or environmental impact and includes Corporate Social Performance (CSP), Corporate Environmental Performance (CEP), Corporate Social Responsibility (CSR), Environmental Social and Governance (ESG), and Socially Responsible Investing (SRI) performance.Equity Investments: Buying and holding shares of a stock or partial ownership of a company. Extra-financial data: non-financial data that hasn’t historically been incorporated into traditional fundamental investment analysis. Extra-financial data can be categorised into Environmental, Social and Governance data. Financial Performance (Stipulative definition): For the purposes of this research this phrase is an overarching term that indicates corporate financial impact and includes Corporate Financial Performance (CFP), Return on Invested Capital (ROIC), Return on Investment (ROI), Return on Assets (ROA), Return on Equity (ROE), Earnings Before Interest Taxes Depreciation and Amortization (EBITDA), net profit, and share price performance.Fundamental Investor: An investor who uses economic and financial factors to assess a company’s intrinsic value. Can consider factors from the state of the economy to management effectiveness. Impact Investing: Investments that address social or environmental issues. Executed with the characteristics of intentionality, measurability, and additionality. Institutional Investor: An organisation that invest on behalf of a collection of members. Usually trades securities in large quantities and faces fewer regulations than individuals (retail investors). Integrated ESG Analysis: Including ESG factors in traditional fundamental financial analysis when making an investment decision. Intentionality: Investor has explicit goal to create positive social or environmental impact.Investment practitioners (Stipulative definition): For the purposes of this research investment practitioners are any professionals who make investment decisions within an institutional investment firm or support the decision-making process (e.g. portfolio manager, ESG analyst). Investment Universe: A selection of securities that have common characteristics. Often defined to outline the scope of investment opportunities an investor will consider. Market Rate Returns: The amount of profit that the market (collection of investors) expects to derive from an investment of a give risk level. Materiality: When issues are important to investors because they are considered reasonably likely to affect the financial or operating performance of a company.Measurability: Investor quantifies that magnitude of the impact created by the investment.Negative Screening: Excluding a security from a portfolio due to ESG criteria Quantitative (Quant) Investor: An investor who uses sophisticated computer modelling and algorithms to identify investment opportunities. Retail Investor: Individual who invests with a personal account instead of through an organisation (institutional investor). Usually trades securities in smaller amounts than institutional investors. Stranded Assets: An asset that has been devalued rapidly due to a premature write-down and/or has become obsolete. Sustainable Investments (Stipulative definition): For the purposes of this research sustainable investments are investments that use at least one sustainable investment strategy within the investment process such as, negative screening, best-in-class, integrated ESG analysis, sustainable thematic investing, active ownership, and/or impact investing.Sustainable Thematic Investing: Focusing investments around sustainable themes such as renewable energy, sustainable agriculture, etc. Theory of Change (ToC): A narrative or description of how and why a change will occur. Tracking Error: The difference between a portfolio’s financial performance and the benchmark/index it is being compared to. IntroductionThe global financing necessary to transition to a sustainable economic system is a significant sum. According to the United Nations Conference on Trade and Development (UNCTAD), we require investments of US$5-7 trillion annually between 2015-2030 to achieve the Sustainable Development Goals (SDGs), of which there is a US$2.5 trillion annual gap for developing countries alone ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"978-92-1-112873-4","ISBN":"978-92-1-112873-4","abstract":"InvestIng In the SDGs: An ActIon Plan","author":[{"dropping-particle":"","family":"UNCTAD","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"United Nations Publication UNCTAD","id":"ITEM-1","issued":{"date-parts":[["2014"]]},"number-of-pages":"264","title":"World Investment Report 2014","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(UNCTAD, 2014)","plainTextFormattedCitation":"(UNCTAD, 2014)","previouslyFormattedCitation":"(UNCTAD, 2014)"},"properties":{"noteIndex":0},"schema":""}(UNCTAD, 2014). Furthermore, the 2018 IPCC report states that in order to keep temperatures from increasing beyond 1.5°C, annual investments in energy efficiency and low-carbon technologies needs to be six times higher than they were in 2015 ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Masson-Delmotte, V., P. Zhai, H.-O. P?rtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor","given":"and T. Waterfield","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"title":"IPCC, 2018: Global Warming of 1.5°C. An IPCC Special Report on the impacts of global warming of 1.5°C above pre-industrial levels and related global greenhouse gas emission pathways, in the context of strengthening the global response to the threat of cli","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Masson-Delmotte, V., P. Zhai, H.-O. P?rtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, 2018)","plainTextFormattedCitation":"(Masson-Delmotte, V., P. Zhai, H.-O. P?rtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, 2018)","previouslyFormattedCitation":"(Masson-Delmotte, V., P. Zhai, H.-O. P?rtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, 2018)"},"properties":{"noteIndex":0},"schema":""}(Masson-Delmotte, V., P. Zhai, H.-O. P?rtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. Péan, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, 2018). While total annual official development assistance falls far short of sums required, reaching a peak of US$142.6 billion in 2016 ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"URL":"","author":[{"dropping-particle":"","family":"OECD","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019","2","17"]]},"title":" - OECD","type":"webpage"},"uris":[""]}],"mendeley":{"formattedCitation":"(OECD, 2019)","plainTextFormattedCitation":"(OECD, 2019)","previouslyFormattedCitation":"(OECD, 2019)"},"properties":{"noteIndex":0},"schema":""}(OECD, 2019), there is potential for significant increases in private sector investment contributions ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"978-92-1-112873-4","ISBN":"978-92-1-112873-4","abstract":"InvestIng In the SDGs: An ActIon Plan","author":[{"dropping-particle":"","family":"UNCTAD","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"United Nations Publication UNCTAD","id":"ITEM-1","issued":{"date-parts":[["2014"]]},"number-of-pages":"264","title":"World Investment Report 2014","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(UNCTAD, 2014)","plainTextFormattedCitation":"(UNCTAD, 2014)","previouslyFormattedCitation":"(UNCTAD, 2014)"},"properties":{"noteIndex":0},"schema":""}(UNCTAD, 2014). In fact, some claim that without a major shift in the participation of the private sector’s US$289 trillion in assets under management (AUM), meeting the SDG targets will be unattainable ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Business & Sustainable Development Commission","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Better Business Better World: The report of the Business & Sustainable Development Commission","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Business & Sustainable Development Commission, 2017)","plainTextFormattedCitation":"(Business & Sustainable Development Commission, 2017)","previouslyFormattedCitation":"(Business & Sustainable Development Commission, 2017)"},"properties":{"noteIndex":0},"schema":""}(Business & Sustainable Development Commission, 2017). For the purposes of this research, sustainable investing will include any investment under a strategy that involves at least some consideration of Environmental, Social and Governance (ESG) information within the investment process. In 2018, there was a total of US$30.7 trillion that was categorised as sustainable investments, but the level of integration of sustainable investment strategies ranges ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2017, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2016, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2018. Generally","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-29","title":"Global sustainable investment review 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2018)","plainTextFormattedCitation":"(GSIA, 2018)","previouslyFormattedCitation":"(GSIA, 2018)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2018). A more stringent measure of the private sectors participation in sustainable investing is that out of its total AUM only an estimated US$228.1 billion is classified as impact investments, signifying the enormous room for growth of investments that intentionally seek to achieve a positive social or environmental impact ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"This report presents findings from the Global Impact Investing Network’s eighth Annual Impact Investor Survey. These findings reflect 229 respondents’ perspectives on the growth and development of the impact investing industry. The report includes analysis of respondents’ investment activity, asset allocations, impact measurement practices, and performance. For the first time, the report also presents trends analysis for a subset of 82 respondents that participated in the survey in 2013 and again this year. Major market developments over the course of 2017 are also described throughout the report.","author":[{"dropping-particle":"","family":"GIIN","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"language":"English","title":"Annual Impact Investor Survey 2018: The Eighth Edition","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GIIN, 2018)","plainTextFormattedCitation":"(GIIN, 2018)","previouslyFormattedCitation":"(GIIN, 2018)"},"properties":{"noteIndex":0},"schema":""}(GIIN, 2018). Therefore, the investment community’s resources represent a significant lever to create positive change if it can be allocated with sustainable considerations. There are some mixed conclusions about the correlation between sustainable investment considerations and financial performance especially when factors such as materiality and timeframe are considered; however, in general there is a significant amount of literature that indicates a positive correlation ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"Purpose: This paper goes beyond whether or not CSR is positive or negative related to financial performance in SMEs. The aim is to explore, analyze and highlight the impact of both the social and the environmental dimension of CSR on SMEs financial performance in Europe and Asia. Furthermore, the study investigates to what extent European SMEs and Asian SMEs differ in regards to the relationship. Additional effort will also be given to different categories within each dimension. Method - The GRI framework is adapted and modified from Chen et al. (2015A; 2015B) with purpose to conduct content analysis of CSR reports, in order to explore the relationship between the social and environmental dimension of CSR and financial performance of European and Asian SMEs. Findings:The paper finds that there is a positive impact of both the social and the environmental dimension of CSR on SMEs financial performance. In addition, the social dimension of CSR indicates to affect the relationship the most. Furthermore, the research provides evidence that CSR in European SMEs to a higher degree impact their financial performance. The findings should be valuable for researchers, managers and stakeholders. Originality: To the best of our knowledge, this is the first paper that uses the GRI framework to provide evidence of both the social and the environmental dimensions of CSR and the relationship with financial performance in European and Asian SMEs","author":[{"dropping-particle":"","family":"Bohlin","given":"Ida","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Wiebe","given":"Jenny","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2016"]]},"title":"Does it Pay for SMEs to be Good and Green ?","type":"article-journal"},"uris":[""]},{"id":"ITEM-2","itemData":{"DOI":"10.1108/PAR-05-2013-0047","ISBN":"0114-0582","ISSN":"20415494","abstract":"Purpose - The purpose of this paper is to examine the association between share prices and the level of corporate social responsibility (CSR) disclosure of large UK companies, using CSR data from an independent firm and a time period and setting (the UK) that coincides with increased legislation and increased public awareness of corporate social and environmental issues. Against a background of increased interest by investors in CSR disclosure, prior mixed results on the association between CSR disclosure and share prices suggest the need for further research that overcome some of the identified limitations of the extant literature. Design/methodology/approach - A modified Ohlson (1995) model is used to examine the relationship between CSR disclosure and share prices among the 100 largest UK companies. Three different measures of CSR disclosure are used to ensure robustness of results. Findings - The paper finds that higher levels of CSR disclosure are associated with higher share prices. Furthermore, the paper provides evidence that CSR disclosure by companies operating in environmentally sensitive industries show a stronger association with share prices than CSR disclosure by companies operating in other industries. The paper concludes that CSR disclosure provides incremental value-relevant information to investors beyond financial accounting information. Originality/value - To the best of our knowledge, this is the first paper to provide evidence of the incremental value of CSR disclosure to share price determination in the UK, a country where CSR disclosure is high on the agenda. Our findings provide evidence that CSR disclosures by companies and, in particular, disclosures following the global reporting initiative (GRI) guidelines, are useful to investors and shareholders, as it is related to share price information. [ABSTRACT FROM AUTHOR]","author":[{"dropping-particle":"","family":"Klerk","given":"Marna","non-dropping-particle":"De","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Villiers","given":"Charl","non-dropping-particle":"de","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Staden","given":"Chris","non-dropping-particle":"van","parse-names":false,"suffix":""}],"container-title":"Pacific Accounting Review","id":"ITEM-2","issue":"2","issued":{"date-parts":[["2015"]]},"page":"208-228","title":"The influence of corporate social responsibility disclosure on share prices: Evidence from the United Kingdom","type":"article-journal","volume":"27"},"uris":[""]},{"id":"ITEM-3","itemData":{"ISBN":"90-5892-132-8","abstract":"Proefschrift Rotterdam.","author":[{"dropping-particle":"","family":"Derwall","given":"Jeroen","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-3","issued":{"date-parts":[["2007"]]},"number-of-pages":"1-258","title":"The Economic Virtues of SRI and CSR","type":"book"},"uris":[""]},{"id":"ITEM-4","itemData":{"author":[{"dropping-particle":"","family":"Clark","given":"Gordon L.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Feiner","given":"Andreas","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Viehs","given":"Michael","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-4","issued":{"date-parts":[["2014"]]},"title":"Arabesque Partners","type":"article-journal"},"uris":[""]},{"id":"ITEM-5","itemData":{"DOI":"10.2139/ssrn.1964011","ISBN":"0025-1909","ISSN":"0025-1909","PMID":"25246403","abstract":"We investigate the effect of a corporate culture of sustainability on multiple facets of corporate behavior and performance outcomes. Using a matched sample of 180 companies, we find that corporations that voluntarily adopted environmental and social policies many years ago – termed as High Sustainability companies – exhibit fundamentally different characteristics from a matched sample of firms that adopted almost none of these policies – termed as Low Sustainability companies. In particular, we find that the boards of directors of these companies are more likely to be responsible for sustainability and top executive incentives are more likely to be a function of sustainability metrics. Moreover, they are more likely to have organized procedures for stakeholder engagement, to be more long-term oriented, and to exhibit more measurement and disclosure of nonfinancial information. Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance. The outperformance is stronger in sectors where the customers are individual consumers instead of companies, companies compete on the basis of brands and reputations, and products significantly depend upon extracting large amounts of natural resources.","author":[{"dropping-particle":"","family":"Eccles","given":"Robert G.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Ioannou","given":"Ioannis","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Serafeim","given":"George","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Ssrn","id":"ITEM-5","issued":{"date-parts":[["2016"]]},"title":"The Impact of Corporate Sustainability on Organizational Processes and Performance","type":"article-journal"},"uris":[""]},{"id":"ITEM-6","itemData":{"DOI":"10.1080/20430795.2015.1118917","ISBN":"0769528295","ISSN":"20430809","PMID":"15956742","abstract":"The search for a relation between environmental, social, and governance (ESG) criteria and corporate financial performance (CFP) can be traced back to the beginning of the 1970s. Scholars and investors have published more than 2,000 empirical studies and several review studies on this relation since then. The largest previous review study analyzes just a fraction of existing primary studies, making findings difficult to generalize. Thus, knowledge on the financial effects of ESG criteria remains fragmented. To overcome this shortcoming, this study extracts all provided primary and secondary data of previous academic review studies. Through doing this, the study combines the findings of about 2,200 individual studies. Hence, this study is by far the most exhaustive overview of academic research on this topic and allows for generalizable statements. The results show that the business case for ESG investing is empirically very well-founded. Roughly 90% of studies find a non-negative ESG-CFP relation. More importantly, the large majority of studies reports positive findings. We highlight that the positive ESG impact on CFP appears stable over time. Promising results are obtained when differentiating for portfolio and non-portfolio studies, regions, and young asset classes for ESG investing such as emerging markets, corporate bonds, and green real estate.","author":[{"dropping-particle":"","family":"Friede","given":"Gunnar","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Busch","given":"Timo","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bassen","given":"Alexander","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-6","issue":"4","issued":{"date-parts":[["2015"]]},"page":"210-233","title":"ESG and financial performance: aggregated evidence from more than 2000 empirical studies","type":"article-journal","volume":"5"},"uris":[""]},{"id":"ITEM-7","itemData":{"abstract":"This report presents findings from the Global Impact Investing Network’s eighth Annual Impact Investor Survey. These findings reflect 229 respondents’ perspectives on the growth and development of the impact investing industry. The report includes analysis of respondents’ investment activity, asset allocations, impact measurement practices, and performance. For the first time, the report also presents trends analysis for a subset of 82 respondents that participated in the survey in 2013 and again this year. Major market developments over the course of 2017 are also described throughout the report.","author":[{"dropping-particle":"","family":"GIIN","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-7","issued":{"date-parts":[["2018"]]},"language":"English","title":"Annual Impact Investor Survey 2018: The Eighth Edition","type":"report"},"uris":[""]},{"id":"ITEM-8","itemData":{"DOI":"10.1080/20430795.2016.1234909","ISSN":"20430809","abstract":"ISSN: 2043-0795 (Print) 2043-0809 (Online) Journal homepage: ABSTRACT Conventional finance wisdom indicates that less risk leads to lower returns. Against this belief, new mathematical analysis, introduced in this article, demonstrates that companies that incorporate Environmental, Social and Fair Governance (ESG) factors show lower volatility in their stock performances than their peers in the same industry, that each industry is affected differently by ESG factors, and that ESG companies generate higher returns. The study assessed, for a period of 2 years, 157 companies listed on the Dow Jones Sustainability Index and 809 that are not.","author":[{"dropping-particle":"","family":"Kumar","given":"Ashwin N. C.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Smith","given":"Camille","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Badis","given":"Le?la","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Wang","given":"Nan","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Ambrosy","given":"Paz","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Tavares","given":"Rodrigo","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-8","issue":"4","issued":{"date-parts":[["2016"]]},"page":"292-300","publisher":"Taylor & Francis","title":"ESG factors and risk-adjusted performance: a new quantitative model","type":"article-journal","volume":"6"},"uris":[""]},{"id":"ITEM-9","itemData":{"DOI":"10.1080/20430795.2012.655889","abstract":"ISSN: 2043-0795 (Print) 2043-0809 (Online) Journal homepage: Companies and investors perceive the value of corporate social responsibility (CSR) differently; companies strive to obtain a com-petitive advantage and long-term value by working strategically with CSR, whereas investors see major barriers of integrating environmental, social and governance (ESG) factors into financial valuation models. Investors' current methods of applying ESG data in a financial valuation are categorized as either a 'single decision model' where only financial data are valued or a 'dual decision model' where both financial data and ESG factors are considered sequentially. As some socially responsible invest-ment funds are able to outperform the market, we argue that the two models identified are insufficient to capture the additional value. On the basis of previous attempts to theoretically link CSR and economic performance, we propose that a new 'integrated decision model' should integrate financial data and ESG factors, but should not be based on existing valuation methods. Moreover, it should pursue a single objective, namely 'value maximization'. A case study on the Danish company Novozymes shows that, in practice, each identified group of the interviewed investors value ESG data differently. One sophisticated investor group implicitly integrates ESG factors into a long-term focused valuation, where considerable value is attributed to ESG factors.","author":[{"dropping-particle":"","family":"Nielsen","given":"Kristina Praestbro","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Noergaard","given":"Rikke Winther","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance & Investment","id":"ITEM-9","issued":{"date-parts":[["2017"]]},"title":"Journal of Sustainable Finance & Investment CSR and mainstream investing: a new match? – an analysis of the existing ESG integration methods in theory and practice and the way forward CSR and mainstream investing: a new match? – an analysis of the existin","type":"article-journal","volume":"0795"},"uris":[""]},{"id":"ITEM-10","itemData":{"DOI":"10.1080/20430795.2016.1176425","ISSN":"20430809","PMID":"19717154","abstract":"True ESG integration means ESG factors are systematically fed into the valuation models and investment decisions of analysts and PMs. However, most ESG approaches fail to do this. As a result, sustainable investing is much less an application success than a marketing success. Our Value Driver Adjustment (VDA) approach is different: it ties into traditional valuation approaches by linking ESG issues to value drivers via their impact on business models and competitive positions. For equities, the initial results find that the average target price impact of ESG factors is 5% overall, and 10% conditional on non-zero adjustments; dispersion is wide as target price changes ranged from -23% to 71%. The investment team has experienced a pay-off in terms of more in-depth analysis of companies, a clearer view on risk and better informed decisions.","author":[{"dropping-particle":"","family":"Schramade","given":"Willem","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-10","issue":"2","issued":{"date-parts":[["2016"]]},"page":"95-111","publisher":"Taylor & Francis","title":"Integrating ESG into valuation models and investment decisions: the value-driver adjustment approach","type":"article-journal","volume":"6"},"uris":[""]},{"id":"ITEM-11","itemData":{"DOI":"10.1504/pie.2008.019127","ISSN":"1476-8917","abstract":"Sustainable investments have become increasingly common in recent years. By reporting their environmental, social and sustainability performance, companies want to present themselves as good corporate citizens and thus, attract investors. However, do sustainability reports really show a fair picture of firms' sustainability work and its outcomes for both sustainable development and financial success? In this study, a sample of 100 companies was analysed using the framework of the Global Reporting Initiative (GRI), with respect to (1) the relation between their environmental, social and sustainability activities and their impact on the environment, the social system and sustainable development and (2) the relation between their nonfinancial performance (environmental, social, sustainability) and their financial performance. The results revealed a positive correlation between the sustainability activities, the impact on sustainable development and the financial performance of the companies.","author":[{"dropping-particle":"","family":"Weber","given":"Olaf","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Koellner","given":"Thomas","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Ohnemus","given":"Peter","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Steffensen","given":"Henrik","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Habegger","given":"Dominique","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Progress in Industrial Ecology, An International Journal","id":"ITEM-11","issue":"3","issued":{"date-parts":[["2008"]]},"page":"236","title":"The relation between the GRI indicators and the financial performance of firms","type":"article-journal","volume":"5"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bohlin & Wiebe, 2016; Clark, Feiner, & Viehs, 2014; De Klerk, de Villiers, & van Staden, 2015; Derwall, 2007; Eccles, Ioannou, & Serafeim, 2016; Friede, Busch, & Bassen, 2015; GIIN, 2018; Kumar et al., 2016; Nielsen & Noergaard, 2017; Schramade, 2016; Weber, Koellner, Ohnemus, Steffensen, & Habegger, 2008)","plainTextFormattedCitation":"(Bohlin & Wiebe, 2016; Clark, Feiner, & Viehs, 2014; De Klerk, de Villiers, & van Staden, 2015; Derwall, 2007; Eccles, Ioannou, & Serafeim, 2016; Friede, Busch, & Bassen, 2015; GIIN, 2018; Kumar et al., 2016; Nielsen & Noergaard, 2017; Schramade, 2016; Weber, Koellner, Ohnemus, Steffensen, & Habegger, 2008)","previouslyFormattedCitation":"(Bohlin & Wiebe, 2016; Clark, Feiner, & Viehs, 2014; De Klerk, de Villiers, & van Staden, 2015; Derwall, 2007; Eccles, Ioannou, & Serafeim, 2016; Friede, Busch, & Bassen, 2015; GIIN, 2018; Kumar et al., 2016; Nielsen & Noergaard, 2017; Schramade, 2016; Weber, Koellner, Ohnemus, Steffensen, & Habegger, 2008)"},"properties":{"noteIndex":0},"schema":""}(Bohlin & Wiebe, 2016; Clark, Feiner, & Viehs, 2014; De Klerk, de Villiers, & van Staden, 2015; Derwall, 2007; Eccles, Ioannou, & Serafeim, 2016; Friede, Busch, & Bassen, 2015; GIIN, 2018; Kumar et al., 2016; Nielsen & Noergaard, 2017; Schramade, 2016; Weber, Koellner, Ohnemus, Steffensen, & Habegger, 2008). However, despite the growing business case for incorporating ESG factors into investment decisions, the mainstreaming of sustainable investment practices has been slow ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1177/0007650315570701","abstract":"This article explores the role of financial markets for sustainable development. More specifically, the authors ask to what extent financial markets foster and facilitate more sustainable business practices. The authors highlight that their current role is rather modest and conclude that, on the old paths, a paradoxical situation exists. On one hand, financial market participants increasingly integrate environmental, social, and governance (ESG) criteria into their investment decisions, whereas on the other hand, in terms of organizational reality, there seems to be no real shift toward more sustainable business practices. The authors identify two main challenges within the field of sustainable investments that are relevant for entering new avenues that may help overcome this situation. First, a reorientation toward a long-term paradigm for sustainable investments is important. Second, ESG data must become more trustworthy. From a theoretical point of view, the authors finally highlight the potential mark...","author":[{"dropping-particle":"","family":"Busch","given":"Timo","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bauer","given":"Rob","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Orlitzky","given":"Marc","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Business & Society","id":"ITEM-1","issue":"3","issued":{"date-parts":[["2016","3","10"]]},"page":"303-329","publisher":"SAGE PublicationsSage CA: Los Angeles, CA","title":"Sustainable Development and Financial Markets: Old paths and new avenues","type":"article-journal","volume":"55"},"uris":[""]}],"mendeley":{"formattedCitation":"(Busch, Bauer, & Orlitzky, 2016)","plainTextFormattedCitation":"(Busch, Bauer, & Orlitzky, 2016)","previouslyFormattedCitation":"(Busch, Bauer, & Orlitzky, 2016)"},"properties":{"noteIndex":0},"schema":""}(Busch, Bauer, & Orlitzky, 2016). According to a survey conducted by Ernst and Young, only 37% of investment professionals consider extra-financial data, and the thoroughness of analysis within this group varies widely ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"EY","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2015"]]},"title":"Tomorrow's Investment Rules 2.0 | 1","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(EY, 2015)","plainTextFormattedCitation":"(EY, 2015)","previouslyFormattedCitation":"(EY, 2015)"},"properties":{"noteIndex":0},"schema":""}(EY, 2015). The main sustainable investment strategies that facilitate the consideration of extra-financial data are negative screening, best-in-class, integrated ESG analysis, active ownership, thematic investing, and impact investing ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2139/ssrn.2925310","abstract":"Using survey data from a sample of senior investment professionals from mainstream (i.e. not SRI funds) investment organizations we provide insights into why and how investors use reported environmental, social and governance (ESG) information. The primary reason survey respondents consider ESG information in investment decisions is because they consider it financially material to investment performance. ESG information is perceived to provide information primarily about risk rather than a company's competitive positioning. There is no one size fits all, with the financial materiality of different ESG issues varying across sectors. Lack of comparability due to the lack of reporting standards is the primary impediment to the use of ESG information. Most frequently, the information is used to screen companies with the most often used method being negative screening. However, negative screening is perceived as the least investment beneficial while full integration into stock valuation and positive screening considered more beneficial. Respondents expect negative screening to be used less in the future, while positive screening and active ownership to be used more.","author":[{"dropping-particle":"","family":"Amel-Zadeh","given":"Amir","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Serafeim","given":"George","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"SSRN Electronic Journal","id":"ITEM-1","issued":{"date-parts":[["2017"]]},"page":"87-104","title":"Why and How Investors Use ESG Information: Evidence from a Global Survey","type":"article-journal"},"uris":[""]},{"id":"ITEM-2","itemData":{"ISBN":"1118203178","author":[{"dropping-particle":"","family":"Mirjam Staub-Bisang","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"edition":"1st Edition","id":"ITEM-2","issued":{"date-parts":[["2012"]]},"number-of-pages":"256","publisher":"Wiley","title":"Sustainable Investing for Institutional Investors: Risks, Regulations and ... - Mirjam Staub-Bisang - Google Books","type":"book"},"uris":[""]},{"id":"ITEM-3","itemData":{"DOI":"10.1016/J.SPC.2019.03.006","ISSN":"2352-5509","abstract":"Socially Responsible Investments (SRIs) have become increasingly popular over the past decade. The majority of the literature focuses on SRI performance (versus conventional investments), content and related evaluation-screening techniques. Even though numerous terms with differing focus have been coined (e.g. sustainable, environmental, ethical, and social investments) to describe the rationale for SRIs, they all pertain to one all-encompassing SRIs definition. This undermines the accuracy and robustness of current measurement techniques as only certain aspects of the overall SRIs performance are assessed. The purpose of this paper is threefold: Firstly, a mapping of SRIs terminology according to the focus areas is provided followed by a classification for Socially Responsible Investors based on underlying motivational factors. A narrative literature review has been conducted for SRIs relying on the triple-bottom-line approach. It concludes with a mapping of SRIs territory by outlining seven distinct SRI categories for investors’ motivations and also offers a classification with ten types of SRIs. Thirdly, a discussion regarding the relationship between SRIs and cleaner production is presented. The finding shows that there is a dichotomy in the field of SRIs. Some types of investors move to SRIs mainly to exploit new financial opportunities or to avoid potential risks regarding the environmental and social aspects of sustainability while value-based investors are willing to invest money in firms and projects with an environmental, social and ethical orientation.","author":[{"dropping-particle":"","family":"Chatzitheodorou","given":"Kyriakos","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Skouloudis","given":"Antonis","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Evangelinos","given":"Konstantinos","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Nikolaou","given":"Ioannis","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Sustainable Production and Consumption","id":"ITEM-3","issued":{"date-parts":[["2019","7","1"]]},"page":"117-129","publisher":"Elsevier","title":"Exploring socially responsible investment perspectives: A literature mapping and an investor classification","type":"article-journal","volume":"19"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amel-Zadeh & Serafeim, 2017; Chatzitheodorou, Skouloudis, Evangelinos, & Nikolaou, 2019; Mirjam Staub-Bisang, 2012)","plainTextFormattedCitation":"(Amel-Zadeh & Serafeim, 2017; Chatzitheodorou, Skouloudis, Evangelinos, & Nikolaou, 2019; Mirjam Staub-Bisang, 2012)","previouslyFormattedCitation":"(Amel-Zadeh & Serafeim, 2017; Chatzitheodorou, Skouloudis, Evangelinos, & Nikolaou, 2019; Mirjam Staub-Bisang, 2012)"},"properties":{"noteIndex":0},"schema":""}(Amel-Zadeh & Serafeim, 2017; Chatzitheodorou, Skouloudis, Evangelinos, & Nikolaou, 2019; Mirjam Staub-Bisang, 2012). If the financial system is to be in alignment with society’s social and environmental needs, then it will be important to increase both the proportion of investment professionals that consider extra-financial information and the rigour with which they consider the data. Financial innovation in this regard is not unprecedented, and in fact it is crucial that the capital markets continue to evolve to meet humanity’s social and environmental challenges ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2469/faj.v69.n1.4","abstract":"At the 2012 CFA Institute Financial Analysts Seminar, held 23-27 July in Chicago, Robert J. Shiller discussed his view that capitalism must be constantly updated through innovation in order to be successful in its purpose of achieving society's goals. Three recent innovations--the benefit corporation, crowd funding, and the social impact bond--are good examples of how finance and financiers can contribute to attaining these goals.","author":[{"dropping-particle":"","family":"Shiller","given":"Robert J.","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Financial Analysts Journal","id":"ITEM-1","issue":"1","issued":{"date-parts":[["2013","1","28"]]},"page":"21-25","title":"Capitalism and Financial Innovation","type":"article-journal","volume":"69"},"uris":[""]}],"mendeley":{"formattedCitation":"(Shiller, 2013)","plainTextFormattedCitation":"(Shiller, 2013)","previouslyFormattedCitation":"(Shiller, 2013)"},"properties":{"noteIndex":0},"schema":""}(Shiller, 2013). Problem DefinitionIt appears that many investment practitioners lack the expertise on how to integrate sustainable investment strategies into their investment processes and as a result, how to navigate the choices between different sustainable investment strategies. The lack of ESG integration knowledge is highlighted in a recent PRI report where investors and analysts are “calling for more guidance on exactly ‘how’ they can ‘do ESG’ and integrate ESG data into their analysis” ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Orsagh","given":"Matt","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Allen","given":"James","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Sloggett","given":"Justin","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Georgieva","given":"Anna","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bartholdy","given":"Sofia","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Douma","given":"Kris","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"177","title":"Guidance and Case Studies for Esg Integration: Equities and Fixed Income","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Orsagh et al., 2018)","plainTextFormattedCitation":"(Orsagh et al., 2018)","previouslyFormattedCitation":"(Orsagh et al., 2018)"},"properties":{"noteIndex":0},"schema":""}(Orsagh et al., 2018). There is feedback from the investment community that sustainability data quality is a barrier to integration, but alongside this assertion investors are requesting a more detailed understanding of why and how to use the sustainability data ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2139/ssrn.2925310","abstract":"Using survey data from a sample of senior investment professionals from mainstream (i.e. not SRI funds) investment organizations we provide insights into why and how investors use reported environmental, social and governance (ESG) information. The primary reason survey respondents consider ESG information in investment decisions is because they consider it financially material to investment performance. ESG information is perceived to provide information primarily about risk rather than a company's competitive positioning. There is no one size fits all, with the financial materiality of different ESG issues varying across sectors. Lack of comparability due to the lack of reporting standards is the primary impediment to the use of ESG information. Most frequently, the information is used to screen companies with the most often used method being negative screening. However, negative screening is perceived as the least investment beneficial while full integration into stock valuation and positive screening considered more beneficial. Respondents expect negative screening to be used less in the future, while positive screening and active ownership to be used more.","author":[{"dropping-particle":"","family":"Amel-Zadeh","given":"Amir","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Serafeim","given":"George","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"SSRN Electronic Journal","id":"ITEM-1","issued":{"date-parts":[["2017"]]},"page":"87-104","title":"Why and How Investors Use ESG Information: Evidence from a Global Survey","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amel-Zadeh & Serafeim, 2017)","plainTextFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)","previouslyFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)"},"properties":{"noteIndex":0},"schema":""}(Amel-Zadeh & Serafeim, 2017). This speaks to the fact that one of the key challenges inhibiting further sustainable investment integration, is a lack of education and awareness around how to construct sustainable investment strategies and utilise the relevant tools ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Mccluskey","given":"Amanda","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Keeping good companies","id":"ITEM-1","issue":"April","issued":{"date-parts":[["2010"]]},"page":"136-140","title":"Knowns and unknowns — the challenges for long-term sustainability and responsible investment","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Mccluskey, 2010)","plainTextFormattedCitation":"(Mccluskey, 2010)","previouslyFormattedCitation":"(Mccluskey, 2010)"},"properties":{"noteIndex":0},"schema":""}(Mccluskey, 2010). The lack of sustainable investment strategy integration knowledge may be due in part to the fact that extensive research has not been conducted in this field. In particular, the motivations behind strategy choice and the ways in which strategies can be combined needs more clarity ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2139/ssrn.2925310","abstract":"Using survey data from a sample of senior investment professionals from mainstream (i.e. not SRI funds) investment organizations we provide insights into why and how investors use reported environmental, social and governance (ESG) information. The primary reason survey respondents consider ESG information in investment decisions is because they consider it financially material to investment performance. ESG information is perceived to provide information primarily about risk rather than a company's competitive positioning. There is no one size fits all, with the financial materiality of different ESG issues varying across sectors. Lack of comparability due to the lack of reporting standards is the primary impediment to the use of ESG information. Most frequently, the information is used to screen companies with the most often used method being negative screening. However, negative screening is perceived as the least investment beneficial while full integration into stock valuation and positive screening considered more beneficial. Respondents expect negative screening to be used less in the future, while positive screening and active ownership to be used more.","author":[{"dropping-particle":"","family":"Amel-Zadeh","given":"Amir","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Serafeim","given":"George","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"SSRN Electronic Journal","id":"ITEM-1","issued":{"date-parts":[["2017"]]},"page":"87-104","title":"Why and How Investors Use ESG Information: Evidence from a Global Survey","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amel-Zadeh & Serafeim, 2017)","plainTextFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)","previouslyFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)"},"properties":{"noteIndex":0},"schema":""}(Amel-Zadeh & Serafeim, 2017). In addition, much of the existing research is from grey literature such as white papers or reports, as oppose to traditional academic research. Indeed, the lack of quality independent ESG research that uses quantitative metrics is cited by many investment professionals ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"This document – produced by the PRI Listed Equities ESG Integration Working Group - focuses on fundamental equity analysis and the contribution that analysis of ESG factors can make towards an accurate valuation of a listed company. Throughout this document this is referred to as integrated analysis. The document showcases integrated analysis from several of the world’s leading financial institutions. It is designed to give an indication of the nature and quality of analysis available to investors seeking to make integrated investment decisions. The structure of the document follows that of a stylised stock review. We use five stages from analysis of the economies in which a company operates, through the industries in which it operates, the way it conducts its operations, the financial impacts of those operations and finally the valuation tools used. While few of the pieces we assessed followed this process in its entirety, this structure allows us to highlight innovative analysis and common practices at each stage. The stages and their case studies are summarised in Figure 1. The review found advanced use of integrated analysis in all aspects of fundamental equity valuation, particularly in industry analysis, forecasting earnings and adjusting discount rates. These integrated approaches to estimating fair value point towards significantly improved valuation models that account for scarcity of resources, future regulatory directions and timeframe tensions.","author":[{"dropping-particle":"","family":"PRI","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"February","issued":{"date-parts":[["2013"]]},"page":"1-52","title":"How investors are addressing environmental, social and governance factors in fundamental equity valuation","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(PRI, 2013)","plainTextFormattedCitation":"(PRI, 2013)","previouslyFormattedCitation":"(PRI, 2013)"},"properties":{"noteIndex":0},"schema":""}(PRI, 2013). A reliance on grey literature could result in industry biases as many reports are sponsored by corporate institutions. When research is conducted, it appears to be most helpful to investment practitioners when the conversation advances beyond theory and incorporates real world observations and interaction into its methodology ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1080/20430795.2012.655889","abstract":"ISSN: 2043-0795 (Print) 2043-0809 (Online) Journal homepage: Companies and investors perceive the value of corporate social responsibility (CSR) differently; companies strive to obtain a com-petitive advantage and long-term value by working strategically with CSR, whereas investors see major barriers of integrating environmental, social and governance (ESG) factors into financial valuation models. Investors' current methods of applying ESG data in a financial valuation are categorized as either a 'single decision model' where only financial data are valued or a 'dual decision model' where both financial data and ESG factors are considered sequentially. As some socially responsible invest-ment funds are able to outperform the market, we argue that the two models identified are insufficient to capture the additional value. On the basis of previous attempts to theoretically link CSR and economic performance, we propose that a new 'integrated decision model' should integrate financial data and ESG factors, but should not be based on existing valuation methods. Moreover, it should pursue a single objective, namely 'value maximization'. A case study on the Danish company Novozymes shows that, in practice, each identified group of the interviewed investors value ESG data differently. One sophisticated investor group implicitly integrates ESG factors into a long-term focused valuation, where considerable value is attributed to ESG factors.","author":[{"dropping-particle":"","family":"Nielsen","given":"Kristina Praestbro","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Noergaard","given":"Rikke Winther","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance & Investment","id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Journal of Sustainable Finance & Investment CSR and mainstream investing: a new match? – an analysis of the existing ESG integration methods in theory and practice and the way forward CSR and mainstream investing: a new match? – an analysis of the existin","type":"article-journal","volume":"0795"},"uris":[""]}],"mendeley":{"formattedCitation":"(Nielsen & Noergaard, 2017)","plainTextFormattedCitation":"(Nielsen & Noergaard, 2017)","previouslyFormattedCitation":"(Nielsen & Noergaard, 2017)"},"properties":{"noteIndex":0},"schema":""}(Nielsen & Noergaard, 2017). As a result, there is an opportunity for further research in this field that has a direct connection to industry practice and engagement with industry professionals. Since this is a relatively nascent field of research there is an opportunity for new research to challenge the initial assumptions and conceptual models being used to categorise actors and understand their investment strategies. Specifically, it is necessary to challenge the sustainable investment spectrum conceptual model that is often referenced by industry actors ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]},{"id":"ITEM-2","itemData":{"URL":"","accessed":{"date-parts":[["2019","6","18"]]},"author":[{"dropping-particle":"","family":"RIAA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-2","issued":{"date-parts":[["2019"]]},"title":"RI Explained - Responsible Investment Association Australasia","type":"webpage"},"uris":[""]},{"id":"ITEM-3","itemData":{"author":[{"dropping-particle":"","family":"Bridges","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-3","issued":{"date-parts":[["2015"]]},"publisher-place":"London","title":"Bridges Spectrum of Capital: How we define the sustainable and impact investment market","type":"report"},"uris":[""]},{"id":"ITEM-4","itemData":{"author":[{"dropping-particle":"","family":"Rockefeller","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-4","issued":{"date-parts":[["2018"]]},"title":"The Rockefeller Foundation Mission-Related Investing","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018)","plainTextFormattedCitation":"(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018)","previouslyFormattedCitation":"(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018)"},"properties":{"noteIndex":0},"schema":""}(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018). There have been a few studies conducted by organisations such as the CFA Institute and PRI, that categorise surveyed investment practitioners by their sustainable investment strategy and describe the strategies clearly ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]},{"id":"ITEM-2","itemData":{"abstract":"The PRI's Fixed Income Case Study series highlights examples of interesting and innovative approaches to responsible investment. Written by fixed income practitioners from around the world, the case studies cover topics such as integrating ESG, negative and positive screening, thematic investment and engagement. Sharing these examples will enable investors to collectively build a concept of emerging good practice. The PRI aims to publish a set of these short pieces every quarter. If you would like to learn more or contribute your own case study please contact us. NAME KfW ORGANISATION TYPE Development Bank HEADQUARTERS Germany KfW is one of the leading promotional banks in the world – our business activities and social responsibility go hand in hand. Our financing activities support sustainable development in order to improve economic, environmental and social living conditions locally as well as on a global level. We also take on responsibility as an institutional investor, have signed the PRI in 2006 and implemented a sustainable investment approach. By issuing and investing in green bonds we aim to develop this new market segment in order to increase the capital market activities with regard to environmental and climate protection. 2 WHY GREEN BONDS? Investing in green bonds allows fixed income investors to support efforts to mitigate climate change while maintaining returns. We have committed to support a transition to a low carbon economy by financing projects in the field of environmental and climate protection. We also see increasing investor awareness of more sustainable behaviour and are looking to meet increasing demand for sustainable investment products.","author":[{"dropping-particle":"","family":"Sloggett","given":"Justin","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-2","issued":{"date-parts":[["2016"]]},"number-of-pages":"116","title":"A practical guide to ESG integration for equity investing","type":"report"},"uris":[""]},{"id":"ITEM-3","itemData":{"abstract":"This document – produced by the PRI Listed Equities ESG Integration Working Group - focuses on fundamental equity analysis and the contribution that analysis of ESG factors can make towards an accurate valuation of a listed company. Throughout this document this is referred to as integrated analysis. The document showcases integrated analysis from several of the world’s leading financial institutions. It is designed to give an indication of the nature and quality of analysis available to investors seeking to make integrated investment decisions. The structure of the document follows that of a stylised stock review. We use five stages from analysis of the economies in which a company operates, through the industries in which it operates, the way it conducts its operations, the financial impacts of those operations and finally the valuation tools used. While few of the pieces we assessed followed this process in its entirety, this structure allows us to highlight innovative analysis and common practices at each stage. The stages and their case studies are summarised in Figure 1. The review found advanced use of integrated analysis in all aspects of fundamental equity valuation, particularly in industry analysis, forecasting earnings and adjusting discount rates. These integrated approaches to estimating fair value point towards significantly improved valuation models that account for scarcity of resources, future regulatory directions and timeframe tensions.","author":[{"dropping-particle":"","family":"PRI","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-3","issue":"February","issued":{"date-parts":[["2013"]]},"page":"1-52","title":"How investors are addressing environmental, social and governance factors in fundamental equity valuation","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017; PRI, 2013; Sloggett, 2016)","plainTextFormattedCitation":"(CFA, 2017; PRI, 2013; Sloggett, 2016)","previouslyFormattedCitation":"(CFA, 2017; PRI, 2013; Sloggett, 2016)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017; PRI, 2013; Sloggett, 2016); however, these studies often present a simple, siloed view of sustainable investment strategies. There is an emergent discussion that encourages sustainable investment stakeholders to think beyond the established assumptions about the trade-offs between different sustainable investment strategies ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Bannick","given":"Matt","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Goldman","given":"Paula","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Kubzansky","given":"Michael","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Saltuk","given":"Yasemin","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Across the Returns Continuum","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bannick, Goldman, Kubzansky, & Saltuk, 2017)","plainTextFormattedCitation":"(Bannick, Goldman, Kubzansky, & Saltuk, 2017)","previouslyFormattedCitation":"(Bannick, Goldman, Kubzansky, & Saltuk, 2017)"},"properties":{"noteIndex":0},"schema":""}(Bannick, Goldman, Kubzansky, & Saltuk, 2017). It is possible that challenging the existing conceptual models of sustainable investment strategies will lead to a better understanding of the range of strategies and how they can be implemented to meet the financial and non-financial objectives of investment professionals. Objective and Research Questions The aim of this research is to accelerate the transition towards a more sustainable financial system by providing knowledge to assist sustainable investment practitioners in further understanding and integrating sustainable investment strategies into their investment processes. To accomplish this, the research gap identified in Section 1.1 will be addressed by exploring the details of how investment practitioners use available sustainable investment strategies to achieve their investment objectives. The following research questions and hypotheses will be used to structure the collection of necessary information: RQ1: How do market rate return equity investment practitioners combine sustainable investment strategies within their investment process? H1: Many investors don’t use a single sustainable investment strategy and are not easily defined by one subcategory of the sustainable investment spectrum. Instead, they combine multiple strategies to meet mixed objectives. RQ2: How do market rate return equity investment practitioners plan to improve their sustainable investment practices? H2: Investment practitioners will increasingly use a collection of sustainable investment strategies to optimise security selection and achieve financial and non-financial objectives. In addition, the research aims to use the findings and analysis related to these research questions to assess how accurately the existing literature’s sustainable investment spectrum conceptual model reflects investment practice. In the scenario that inconsistencies are discovered, an alternative conceptual model will be proposed. Scope and LimitationsThe boundaries of this research are defined by the characteristics of investment practitioner type, geographic region, and asset class. As such, the scope of this research will focus on institutional investment practitioners who seek market rate returns, actively manage their portfolios, and incorporate at least some level of sustainability considerations into their investment process. Therefore, traditional investors that do not consider extra-financial data and impact investors and philanthropists that target concessionary returns will be excluded from the study. See figure 1-1 below for an illustration of the scope of research within the investment spectrum. Institutional investors were selected because they hold a significant portion (89%) of assets categorised as sustainable investments, in relation to retail investors (11%) ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2017, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2016, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2018. Generally","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-29","title":"Global sustainable investment review 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2018)","plainTextFormattedCitation":"(GSIA, 2018)","previouslyFormattedCitation":"(GSIA, 2018)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2018). Due to information access and language barriers, the geographic regions focused on are countries within Europe and North America (Canada and United States). Additionally, these regions represent the majority of sustainable investments, accounting for 91% of this class of investment ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2017, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2016, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2018. Generally","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-29","title":"Global sustainable investment review 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2018)","plainTextFormattedCitation":"(GSIA, 2018)","previouslyFormattedCitation":"(GSIA, 2018)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2018). Within these regions, the asset class of focus will be equity securities since it is an important component of portfolios, is appropriate for the greatest number of sustainable investment strategies, and holds significant potential for investors to encourage positive change ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"This report provides a toolkit for investors who wish to design investment strategies that can make a particularly strong contribution to long-term, responsible and sustainable investment, or to assess the extent to which existing strategies contribute to it.","author":[{"dropping-particle":"","family":"Lake","given":"Rob","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Oulton","given":"Will","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"University of Cambridge Institute for Sustainability Leadership (CISL)","id":"ITEM-1","issued":{"date-parts":[["2016"]]},"title":"Taking the long view - A toolkit for long-term, sustainable investment mandates","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Lake & Oulton, 2016)","plainTextFormattedCitation":"(Lake & Oulton, 2016)","previouslyFormattedCitation":"(Lake & Oulton, 2016)"},"properties":{"noteIndex":0},"schema":""}(Lake & Oulton, 2016). Therefore, the research will exclude fixed income, commodities, sovereign bonds, real estate, and any other alternative asset classes. Figure STYLEREF 1 \s 1 SEQ Figure \* ARABIC \s 1 1: Investment spectrum research focusSource: Author’s own There are a number of limitations present within this research. The approach was exploratory in nature and therefore addressed a broad research population. This research was case study based and primarily relied on interviews as the main data collection technique so there are limitations to the generalisability of the findings. Due to the relatively small sample size of interviewees relative to the research population, there are viewpoints not represented in the findings. Another limitation was the interest of investment practitioners to participate in the interviews and the detail of data that was divulged. In order to encourage engagement, the interviews were conducted anonymously; however, investment practitioners have a vested interest in protecting their competitive advantage, so it can be assumed that some investment strategy details were withheld. Furthermore, the information collected via interviews is a representation of interviewees personal views and not necessarily fact. This position presented by the interviewee could be further influenced by the presence of the interviewer who can project their own biases. Indeed, there are important limitations that must be considered when reviewing the research findings. Ethical ConsiderationsEthical considerations have been integrated into every stage of the research including the planning, data collection, data analysis, data storage and reporting. Particular consideration was given to data collection stage of the research since it was based largely on collecting sensitive investment strategy information via interviews. It was therefore important to follow the principles of informed consent, which ensures that interviewee participation is informed and voluntary ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"URL":"","accessed":{"date-parts":[["2019","6","9"]]},"author":[{"dropping-particle":"","family":"Ethics Examination Authority","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["0"]]},"title":"Ethics Examination Authority","type":"webpage"},"uris":[""]}],"mendeley":{"formattedCitation":"(Ethics Examination Authority, n.d.)","plainTextFormattedCitation":"(Ethics Examination Authority, n.d.)","previouslyFormattedCitation":"(Ethics Examination Authority, n.d.)"},"properties":{"noteIndex":0},"schema":""}(Ethics Examination Authority, n.d.). An interview guide was created to assist in delivering a standardised process to each interviewee that included an overview of the project context, the research objectives, and how their responses would be used. Furthermore, interviewees were aware that they could stop the interview at any time. Due to the sensitive nature of the investment strategy information being shared, all information was presented on an anonymous basis and the raw data was held securely with the principle researcher. Finally, it should be noted that the research proposal was reviewed with regard for the criteria for research requiring to go through the ethics review board at Lund University and has not been found to require a statement from the ethics committee. Audience The key intended beneficiaries of this research are market-rate-return, institutional equity investment practitioners who use active portfolio management strategies, since this subsegment of investment practitioners is the area of research focus as outlined in section 1.3. More specifically, this research is relevant for investment practitioner who fall into this category and are interested in gaining a deeper understanding of how and why other similar investment practitioners are integrating sustainable investment strategies. Currently, there is no standardised method of incorporating sustainability data and strategies into investment decision processes and a shortage of people with expertise in factoring these issues into the investment process ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1080/20430795.2015.1118917","ISBN":"0769528295","ISSN":"20430809","PMID":"15956742","abstract":"The search for a relation between environmental, social, and governance (ESG) criteria and corporate financial performance (CFP) can be traced back to the beginning of the 1970s. Scholars and investors have published more than 2,000 empirical studies and several review studies on this relation since then. The largest previous review study analyzes just a fraction of existing primary studies, making findings difficult to generalize. Thus, knowledge on the financial effects of ESG criteria remains fragmented. To overcome this shortcoming, this study extracts all provided primary and secondary data of previous academic review studies. Through doing this, the study combines the findings of about 2,200 individual studies. Hence, this study is by far the most exhaustive overview of academic research on this topic and allows for generalizable statements. The results show that the business case for ESG investing is empirically very well-founded. Roughly 90% of studies find a non-negative ESG-CFP relation. More importantly, the large majority of studies reports positive findings. We highlight that the positive ESG impact on CFP appears stable over time. Promising results are obtained when differentiating for portfolio and non-portfolio studies, regions, and young asset classes for ESG investing such as emerging markets, corporate bonds, and green real estate.","author":[{"dropping-particle":"","family":"Friede","given":"Gunnar","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Busch","given":"Timo","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bassen","given":"Alexander","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-1","issue":"4","issued":{"date-parts":[["2015"]]},"page":"210-233","title":"ESG and financial performance: aggregated evidence from more than 2000 empirical studies","type":"article-journal","volume":"5"},"uris":[""]},{"id":"ITEM-2","itemData":{"author":[{"dropping-particle":"","family":"Mccluskey","given":"Amanda","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Keeping good companies","id":"ITEM-2","issue":"April","issued":{"date-parts":[["2010"]]},"page":"136-140","title":"Knowns and unknowns — the challenges for long-term sustainability and responsible investment","type":"article-journal"},"uris":[""]},{"id":"ITEM-3","itemData":{"DOI":"10.1007/s10551-010-0633-8","ISSN":"01674544","abstract":"The link between Corporate Social Responsibility (CSR) and financial performance has continued to generate mixed and inconclusive results. Most studies in this area seem to assume that corporate social and financial performance share the same under- pinning logic. Drawing from a qualitative analysis of practitioners’ accounts of the challenges of mainstreaming the market for responsible investments, as part of the broader CSR agenda, this article re-examines this taken- for-granted assumption in the extant literature, and reaches the conclusion that CSR, as a complex private governance of externalities, does not easily lend itself to measurability and profitability. In other words, not everything about CSR is measurable and profitable as much as the financial markets would expect. Comparing what is rendered measurable and profitable, on one hand, and what is yet to fully lend itself to measurability and profitability, on the other, is identified as one of the fundamental flaws of this literature. As such, CSR and financial performance will continue to run on competing logics until their different markets are distinctively artic- ulated and/or aligned.","author":[{"dropping-particle":"","family":"Amaeshi","given":"Kenneth","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Business Ethics","id":"ITEM-3","issue":"SUPPL 1","issued":{"date-parts":[["2010"]]},"page":"41-56","title":"Different markets for different folks: Exploring the challenges of mainstreaming responsible investment practices","type":"article-journal","volume":"92"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amaeshi, 2010; Friede et al., 2015; Mccluskey, 2010)","plainTextFormattedCitation":"(Amaeshi, 2010; Friede et al., 2015; Mccluskey, 2010)","previouslyFormattedCitation":"(Amaeshi, 2010; Friede et al., 2015; Mccluskey, 2010)"},"properties":{"noteIndex":0},"schema":""}(Amaeshi, 2010; Friede et al., 2015; Mccluskey, 2010); therefore, this research aims to assist investment practitioners in further integrating sustainable investment strategies into their investment process. This research could also be beneficial for sustainable finance academics who are interested in better understanding the nuances of sustainable investment strategy integration and the conceptual models that organise and categorise sustainable investment strategies. With further research and discussion among the academic community about how to implement effective sustainable investment solutions within different context, it may be possible to solidify best practices and accelerate the transition towards a more sustainable finance sector. Finally, since this is a master’s thesis, an effort has been made to make the research accessible to a broader environmental management and policy-oriented audience. As such, a list of abbreviations (page 11) and definitions (page 12) are outlined to provide readers with guidance regarding financial and sustainability terminology that is relevant to understand this thesis. Disposition This research has identified an opportunity for the finance sector to play a significant role in addressing some of society’s most challenging social and environmental issues. This is elaborated on in Chapter 1, along with rationale as to where additional research needs to be conducted in order to answer the two main research questions. Further foundational information is presented in the form of limitations and scope to define the boundaries of the research project, ethical factors that are considered, and the target audience is identified to provide context as to who the research will be useful for. Since the objective of the research is to accelerate the transition towards a more sustainable financial system by assisting sustainable investment practitioners in further understanding and integrating sustainable investment strategies into their investment processes, Chapter 2 synthesises a literature review of the existing research. Key themes are organized and areas where additional research would be beneficial are identified to guide the focus of the rest of the study. In order to address the research gap, the methodology for conducting desktop and interview based qualitative research is outlined in Chapter 3. This section describes the strategy for systematically answering the research questions. The findings from the case study style research are presented in Chapter 4 and are organised into eight sub-sections, one for each of the case study firms engaged. The information presented is structured based on the research questions and the conceptual model outlined in the literature review. Chapter 5 leverages the findings to answer the research questions, challenge the existing sustainable investment spectrum conceptual model, present an alternative conceptual model, explore possible implications for the finance industry, and discuss limitations. Ultimately, the discussion illuminates some of the nuances within sustainable investment strategy integration that are underrepresented in current research and provides some potential guidance to sustainable investment practitioners. Chapter 6 brings closure to the thesis by synthesising the key conclusions and placing these conclusions within the context of the problem definition. Looking ahead to future studies, a collection of potential research areas is presented which could benefit the sustainable finance industry. Finally, some concluding reflections are offered, commenting on the state of the sustainable finance transition and the necessary future progress. MethodThis research applies a qualitative case study strategy that enables depth rather than breadth of findings. The limitation with this kind of strategy is that it restricts the generalisability of the findings based on the observations. This was the recognised trade-off for being able to understand the nuances of individual practitioner’s investment processes. It was decided that this compromise was acceptable since much of the previous research conducted broad studies with the use of surveys and one of the ways this research differentiates itself is by establishing a more sophisticated understanding of the combination of various sustainable investment strategies. The research population of investment practitioners and their associated firms is defined and justified in section 1.3. Within this scope, information was collected primarily from documents (desktop research) and people (interviews) in order to answer both research questions. The information was then analysed using coding software to organise the findings into interpretable themes. Case Study Approach Case study research was pursued since this study was focused on examining complex processes ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9789059314962","author":[{"dropping-particle":"","family":"Verschuren","given":"Piet","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Doorewaard","given":"Hans","non-dropping-particle":"","parse-names":false,"suffix":""}],"edition":"2nd","id":"ITEM-1","issued":{"date-parts":[["2010"]]},"title":"Designing a Research Project","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(Verschuren & Doorewaard, 2010)","plainTextFormattedCitation":"(Verschuren & Doorewaard, 2010)","previouslyFormattedCitation":"(Verschuren & Doorewaard, 2010)"},"properties":{"noteIndex":0},"schema":""}(Verschuren & Doorewaard, 2010). Furthermore, a case study is ideal when focusing on the deep analysis of a unit, event or process in order to uncover similarities or trends between cases ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2307/4145316","abstract":"This paper aims to clarify the meaning, and explain the utility, of the case study method, a method often practiced but little understood. A \"case study,\" I argue, is best defined as an intensive study of a single unit with an aim to generalize across a larger set of units. Case studies rely on the same sort of covariational evidence utilized in non-case study research. Thus, the case study method is correctly understood as a particular way of defining cases, not a way of analyzing cases or a way of modeling causal relations. I show that this understanding of the subject illuminates some of the persistent ambiguities of case study work, ambiguities that are, to some extent, intrinsic to the enterprise. The travails of the case study within the discipline of political science are also rooted in an insufficient appreciation of the methodological tradeoffs that this method calls forth. This paper presents the familiar contrast between case study and non-case study work as a series of characteristic strengths and weaknesses-affinities-rather than as antagonistic approaches to the empirical world. In the end, the perceived hostility between case study and non-case study research is largely unjustified and, perhaps, deserves to be regarded as a misconception. Indeed, the strongest conclusion to arise from this methodological examination concerns the complementarity of single-unit and cross-unit research designs.","author":[{"dropping-particle":"","family":"Gerring","given":"John","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"The American Political Science Review","id":"ITEM-1","issued":{"date-parts":[["2004"]]},"page":"341-354","publisher":"American Political Science Association","title":"What Is a Case Study and What Is It Good for?","type":"article","volume":"98"},"uris":[""]}],"mendeley":{"formattedCitation":"(Gerring, 2004)","plainTextFormattedCitation":"(Gerring, 2004)","previouslyFormattedCitation":"(Gerring, 2004)"},"properties":{"noteIndex":0},"schema":""}(Gerring, 2004). Within this research, eight firms or cases were chosen and the unit of analysis of each investment firm that was engaged was their equity investment process. Through a combination of document desktop research and practitioner interviews, this qualitative approach is intended to provide deep insights into individual investment processes. Specifically, this approach was able to uncover the investment practitioners’ motivations and considerations behind their key investment strategy design and implementation choices. There were barriers to collecting the required information using other research methods. For example, some investment strategy information is proprietary and is a source of competitive advantage, so it is not publicly available. In general, there is a lack of detailed information within this area of research. Therefore, the anonymous interview format within this case study approach allowed participants to speak more freely so that exploratory research could be conducted in a field with limited data. While there are limits to the generalisability the findings of case study based research ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"1452226105","abstract":"4th ed. \"The eagerly anticipated Fourth Edition of the title that pioneered the comparison of qualitative, quantitative, and mixed methods research design is here! For all three approaches, Creswell includes a preliminary consideration of philosophical assumptions, a review of the literature, an assessment of the use of theory in research approaches, and reflections about the importance of writing and ethics in scholarly inquiry. He also presents the key elements of the research process, giving specific attention to each approach. The Fourth Edition includes extensively revised mixed methods coverage, increased coverage of ethical issues in research, and an expanded emphasis on worldview perspectives.\"--Publishers description. Analytic contents of research techniques --Part I. Preliminary considerations : The selection of a research approach : The three approaches to research ; Three components involved in an approach : Philosophical worldviews; Research designs; Research methods ; Research approaches as worldviews, designs, and methods ; Criteria for selecting a research approach : The research problem and questions; Personal experience; Audience -- Review of the literature : The research topic ; The literature review : The use of the literature; Design techniques; The definition of terms; A quantitative or mixed methods literature review -- The use of theory : Quantitative theory use : Variables in quantitative research; Definition of a theory in quantitative research; Forms of theories in quantitative research; Placement of quantitative theories; Writing a quantitative theoretical perspective ; Qualitative theory use : Variation in theory use in qualitative research; Locating the theory in qualitative research ; Mixed methods theory use : Social science theory use ; Transformative paradigm theory use -- Writing strategies and ethical considerations : Writing the proposal : Arguments presented in a proposal; Format for a qualitative proposal; Designing the sections of a proposal ; Writing ideas : Writing as thinking; The habit of writing; Readability of the manuscript; Voice, tense, and \"fat\" ; Ethical issues to anticipate : Prior to beginning the study; Beginning the study; Collecting the data; Analyzing the data; Reporting, sharing, and storing the data -- Part II. Designing research : The introduction : The importance of introductions ; An abstract for a study ; Qualitative, quantitative, mixed methods introductions ; A model for an introduction : …","author":[{"dropping-particle":"","family":"Creswell","given":"John W.","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2014"]]},"number-of-pages":"273","publisher":"SAGE Publications","title":"Research design: qualitative, quantitative, and mixed methods approaches","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(Creswell, 2014)","plainTextFormattedCitation":"(Creswell, 2014)","previouslyFormattedCitation":"(Creswell, 2014)"},"properties":{"noteIndex":0},"schema":""}(Creswell, 2014), Yin claims that in some cases there is an opportunity for findings to be generalised to broader theory ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"Yin begins the fourth edition of his 6 chapter book by explaining that case study research is a “linear, but iterative process.” This statement is supported by a visual which is displayed on the first page of each chapter. Each chapter contains one step in the linear process of case design (planning, designing, preparing, collecting, analyzing, and sharing) as well as it highlights how each step requires the researcher to review and re-examine former decisions. As Yin points out, each chapter can stand alone, yet it is linked to the other stages of the research process.","author":[{"dropping-particle":"","family":"Yin","given":"R.K.","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"The Canadian Journal of Action Research","id":"ITEM-1","issue":"1","issued":{"date-parts":[["2009"]]},"number-of-pages":"69-71","publisher":"Nipissing University","title":"Canadian journal of action research CJAR.","type":"book","volume":"14"},"uris":[""]}],"mendeley":{"formattedCitation":"(Yin, 2009)","plainTextFormattedCitation":"(Yin, 2009)","previouslyFormattedCitation":"(Yin, 2009)"},"properties":{"noteIndex":0},"schema":""}(Yin, 2009). This was the objective with this research, since the information collected was ultimately used to challenge the common conceptual model used to categorise sustainable investment strategies. Case Study Selection Choosing appropriate cases is a challenging but important procedure since the cases are meant to draw conclusions related to a larger population ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2307/4145316","abstract":"This paper aims to clarify the meaning, and explain the utility, of the case study method, a method often practiced but little understood. A \"case study,\" I argue, is best defined as an intensive study of a single unit with an aim to generalize across a larger set of units. Case studies rely on the same sort of covariational evidence utilized in non-case study research. Thus, the case study method is correctly understood as a particular way of defining cases, not a way of analyzing cases or a way of modeling causal relations. I show that this understanding of the subject illuminates some of the persistent ambiguities of case study work, ambiguities that are, to some extent, intrinsic to the enterprise. The travails of the case study within the discipline of political science are also rooted in an insufficient appreciation of the methodological tradeoffs that this method calls forth. This paper presents the familiar contrast between case study and non-case study work as a series of characteristic strengths and weaknesses-affinities-rather than as antagonistic approaches to the empirical world. In the end, the perceived hostility between case study and non-case study research is largely unjustified and, perhaps, deserves to be regarded as a misconception. Indeed, the strongest conclusion to arise from this methodological examination concerns the complementarity of single-unit and cross-unit research designs.","author":[{"dropping-particle":"","family":"Gerring","given":"John","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"The American Political Science Review","id":"ITEM-1","issued":{"date-parts":[["2004"]]},"page":"341-354","publisher":"American Political Science Association","title":"What Is a Case Study and What Is It Good for?","type":"article","volume":"98"},"uris":[""]}],"mendeley":{"formattedCitation":"(Gerring, 2004)","plainTextFormattedCitation":"(Gerring, 2004)","previouslyFormattedCitation":"(Gerring, 2004)"},"properties":{"noteIndex":0},"schema":""}(Gerring, 2004). Since there was a small number of cases chosen for this research (eight cases) relative to the research population, random sampling was not an ideal technique. Out of the common case study selection techniques which include, typical, diverse, extreme, deviant, influential, most similar, and most different ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1177/1065912907313077","ISSN":"1065-9129","author":[{"dropping-particle":"","family":"Seawright","given":"Jason","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Gerring","given":"John","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Political Research Quarterly","id":"ITEM-1","issue":"2","issued":{"date-parts":[["2008","6","9"]]},"page":"294-308","title":"Case Selection Techniques in Case Study Research","type":"article-journal","volume":"61"},"uris":[""]}],"mendeley":{"formattedCitation":"(Seawright & Gerring, 2008)","plainTextFormattedCitation":"(Seawright & Gerring, 2008)","previouslyFormattedCitation":"(Seawright & Gerring, 2008)"},"properties":{"noteIndex":0},"schema":""}(Seawright & Gerring, 2008), the typical selection technique was chosen for this research. The typical selection technique’s main use case is to probe preconceived notions to test an existing theory ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1177/1065912907313077","ISSN":"1065-9129","author":[{"dropping-particle":"","family":"Seawright","given":"Jason","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Gerring","given":"John","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Political Research Quarterly","id":"ITEM-1","issue":"2","issued":{"date-parts":[["2008","6","9"]]},"page":"294-308","title":"Case Selection Techniques in Case Study Research","type":"article-journal","volume":"61"},"uris":[""]}],"mendeley":{"formattedCitation":"(Seawright & Gerring, 2008)","plainTextFormattedCitation":"(Seawright & Gerring, 2008)","previouslyFormattedCitation":"(Seawright & Gerring, 2008)"},"properties":{"noteIndex":0},"schema":""}(Seawright & Gerring, 2008). This was the most appropriate technique because this research aimed to challenge the existing conceptual model that categorises sustainable investment strategies. This technique also has the advantage of having the highest level of representativeness to the larger population due to the mainstream nature of the cases selected ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1177/1065912907313077","ISSN":"1065-9129","author":[{"dropping-particle":"","family":"Seawright","given":"Jason","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Gerring","given":"John","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Political Research Quarterly","id":"ITEM-1","issue":"2","issued":{"date-parts":[["2008","6","9"]]},"page":"294-308","title":"Case Selection Techniques in Case Study Research","type":"article-journal","volume":"61"},"uris":[""]}],"mendeley":{"formattedCitation":"(Seawright & Gerring, 2008)","plainTextFormattedCitation":"(Seawright & Gerring, 2008)","previouslyFormattedCitation":"(Seawright & Gerring, 2008)"},"properties":{"noteIndex":0},"schema":""}(Seawright & Gerring, 2008). Therefore, it mitigates some of the generalisability limitations that are inherent in case study-based research. In this research, each case study was represented by an individual investment firm, within which there was an investment process that was analysed. Investment firms were selected based on set of criteria outlined in table 2-1. Table STYLEREF 1 \s 2 SEQ Table \* ARABIC \s 1 1. Investment Firm Selection CriteriaInvestment Firm Selection Criteria Institutional investor (endowment funds, banks, mutual funds, hedge funds, pension funds, family offices, investment managers and insurance companies)Engages in active portfolio management Employs either fundamental or quant investment strategies Invests in equities Seek market rate returnsIncorporate some considerations of extra-financial information into investment processLocated in Europe or North America (Canada or United States)Source: Author’s own The firm case study selection had significant influence on the interviewee selection. Once an appropriate firm was targeted, a specific type of investment practitioner within the firm was engaged for interviews. The candidates selected were individuals who work with sustainable investment strategies to make buy/sell/hold decisions on equity positions within a portfolio. While the titles of the candidates selected varied, their role included portfolio management responsibilities where they were involved as key decision makers in asset allocation. Interviewee candidates were identified through the author’s network, the iiiee Alumni Network, recommendations from other interviewees and cold reach-outs. Data CollectionData was collected in four key stages, including a literature review, exploratory interviews, document analysis and focused practitioner interviews. The literature review served to gain a fundamental understanding of the maturity of the research, the state of the global conversation, and the main research gaps. To complement this, exploratory interviews with investment practitioners were used to facilitate open-ended discussions that could gravitate towards the most relevant sustainable investment strategy topics. Before more focused interviews were executed, a selection of investment firms was engaged and document analysis of the sustainable investment policies and strategies of each of these investment firms was conducted. Finally, focused practitioner interviews employed a semi-structured interview format that further explored the nuances of each firm’s sustainable investment process. Utilising multiple data collection techniques and sources facilitated data triangulation and increased the probability of robust results. Literature ReviewThe literature review was completed in a systematic manner to extract key information from LUBsearch, Google Scholar and the Google search engine. Since there is not a significant amount of academic research in this field, industry generated information contributes a valuable perspective. Overall, the source categories included academic research, NGO reports, and industry whitepapers/reports. A preference was given to literature that was published since 2000 and weighted heavily towards literature published in the past 5 years, so as to focus on the most current research in the field. The purpose of the literature review was to establish a broad understanding of the research that has been conducted around the topic of sustainable investment strategy integration. This was helpful in identifying research gaps and documenting the existing conceptual models for organising key concepts and actors. The literature review also contributed to shaping the research questions and hypotheses. Scans of the literature presented a wide selection of documents which were narrowed down based on the following selection criteria. Literature Selection Criteria:Sample literature from the geographic regions that hold most of investments that are associated with sustainable investment strategies (Europe and North America) Include analysis from the full spectrum of responsible investing categories, including negative screening, best-in-class, integrated ESG analysis, active ownership, thematic investing and impact investing Focus on literature relevant to the scope of market rate return, institutional, equity investors who use an active portfolio management approachOriginate from peer reviewed sources or reputable organisations Published after 2000 with an emphasis on material published in the last 5 yearsIn order to analyse the literature thoroughly, a synthesis matrix was used to aggregate relevant sources and organized them into key themes. The following themes were used to unpack the literature: types of strategies, adoption trends, financial performance, integration challenges, motivations for implementation, and conceptual model. An inductive approach was used to create the themes since it was unknown which would be the major themes and theories before the literature review was conducted. By organizing key argument sources in this manner, it became more apparent where there are strengths and weaknesses in this field of research. A key output of the literature review was a synthesis of existing conceptual models, which aim to visualise the spectrum of sustainable investment strategies deployed by sustainable investment practitioners. This culminated with this author creating an adapted version of the model, which borrows elements from the literature’s visualisations with the objective of building a comprehensive representation of the industry’s general perception of sustainable investment strategies. The resulting conceptual model helped frame an understanding of the range of sustainable investment strategies and how practitioners use these strategies. It was also used to develop research questions and formulate hypotheses about how sustainable investment strategies are deployed in practice. Finally, it was used as a baseline against which interview responses could be compared to assess any differences between the academic representation of sustainable investment strategies and how they are deployed in practice. Exploratory Practitioner Interviews After the literature review was completed, the next step was to organise some initial interactions with investment practitioners in the form of semi-structured exploratory interviews. In total, four exploratory practitioner interviews were performed. A full list of interviewees can be found in Appendix B. While there was a fair understanding of the research field gained from the literature review, these open-ended interviews allowed conversations to gravitate towards the sustainable investment strategy topic areas that were most important to industry actors and most relevant for this research to focus on. As a result, the information gathered enabled hypotheses formulation around sustainable investment strategy combinations and facilitated research question refinement. Furthermore, subsequent data collection via document analysis and focused practitioner interviews was more tailored as a result of the initial interviews. Document Analysis Before focused practitioner interviews were conducted, document analysis was conducted for each of the selected investment firms. The types of documents analysed included records outlining a firm’s sustainable investment strategies, investment mandates, codes of conduct, and investment policies. These documents were analysed using content analysis software to code the qualitative data into categories. The purpose of this analysis was to understand and synthesise the publicly available investment practices information. Information documented included sustainable investment resources deployed (data systems, procedures, personnel), sustainability stance, investment mandates, investment due-diligence process (sustainable investment strategies), and relevant sustainable investment memberships. Table 2-1 below is an example of the structure used to collect some of the preliminary information. Once this foundational understanding of a firm’s investment practices was established, the focused practitioner interviews could concentrate on the investment strategy details that were not publicly available. A second round of document analysis was necessary after each interview to triangulate interviewee responses and review any additional documents that were recommended by the interviewee. Table STYLEREF 1 \s 2 SEQ Table \* ARABIC \s 1 2: Example of investment firm overview tableInstitution TypeInterviewee PositionCountryStrategies DeployedObjectivesMemberships,Guidelines & PartnershipsVenture Capital FirmFund ManagerThe NetherlandsNegative screening, thematic investing, impact investingMaximise impact as a primary objective while delivering market rate returns UN Environment, UN SDGs, 20x20 Initiative, AFR100, ISO 14001Focused Practitioner Interviews Investment practitioners were contacted for semi-structured interviews and asked to provide accounts of their investment practices and philosophies. Eight focused interviews were conducted over the course of the data collection period. A full list of interviewees can be found in Appendix B. The interviews lasted between 45-100 minutes, during which time the interviewees were questioned in regard to the research’s unit of analysis, which is an investment firm’s sustainable investment process. The purpose of interviews was to explore the nuances of their sustainable investment strategies beyond what is publicly available online to gain a more detailed understanding of how sustainable investment strategies are deployed in practice. An interview guide was developed to standardise the interview process and was based on the research questions and hypotheses identified in Section 1.2. Although this guide was refined slightly throughout the interview process, its fundamentals remained largely unchanged. The final version of the guide can be found in Appendix A. Interview guide components include, a preamble to set the context for the interview and follow ethical voluntary participation guidelines; a set of six core interview questions; interviewer probes to explore specific details of interviewee responses; and some concluding follow-up questions to gain additional information. During the formulation of the questions, care was taken to develop the interview guide in a way that avoided leading questions so as to minimize the interviewer’s inherent biases. Since some interviewees expressed a concern about divulging sensitive investment strategy information that may represent a competitive advantage, comments were agreed to be presented anonymously. Interviews were conducted via video conference, phone or email and audio recordings were captured where possible to alleviate note taking requirements during the interviews. Data Analysis Qualitative content analysis was used for each of the primary data sources: literature review, interviews (exploratory and focused), and firm specific content analysis. NVivo software was used to code the text-based information into nodes or themes. The key nodes that were used included, sustainable investment strategies, strategy combinations, motivations for implementation, improvement plans, conceptual model, and integration challenges. These nodes were structured around the research questions and conceptual model. Data analysis was also facilitated by the structure of the findings, where each of the case study firms were represented in their own sub-section. This format highlighted key sustainable investment characteristics from each firm and allowed the synthesis of trends among firms to lead to an informed discussion about conclusions. In terms of the analysis of informant-based data, notes were taken during the interview process to highlight key takeaways, and flag important areas of discussion that required further consideration. Whenever the interviewee agreed, audio recordings were generated to capture a comprehensive record of the interaction and were transcribed using transcription software. After transcription, the interviews were read in full to reinforce the author’s understanding and to facilitate the elaboration of notes. A second reading of the interviews was used to code the findings into cohesive themes. When audio recording was not possible, more extensive note taking was required to capture the interview. Triangulation of data sources was used throughout the data analysis phase in order to achieve balance between desktop research and informant-based analysis. Figure 2-1 below outlines the three primary data sources of firm specific document analysis, interviews, and the literature review. This triangulation facilitated the verification of collected information and created a foundation from which more confident conclusions could be drawn. Figure STYLEREF 1 \s 2 SEQ Figure \* ARABIC \s 1 1: Triangulation of primary data sourcesLiterature Review and AnalysisThis chapter organises and synthesises key literature relating to sustainable investment strategies employed by sustainable investment professionals. The review seeks to highlight key themes regarding types of strategies, adoption trends, financial performance, integration challenges, and motivations for implementation. The chapter concludes with a conceptual model that has been adapted from models within pre-existing research and visualises many of the themes discussed. Types of Strategies There are a number of sustainable investment strategies that are relevant to this analysis’ scope, which focuses on strategies appropriate for market rate return equity investment practitioners. The main categories of sustainable investment strategies include negative screening, best in class, active ownership, integrated ESG analysis, thematic investing, and impact investing. Negative or exclusionary screening involves the exclusion of industries, businesses, and/or products from an investment universe pursuant to a set of conditions delineated according to a decision maker’s values, ethics, or principles ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]},{"id":"ITEM-2","itemData":{"abstract":"In early 2015, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2014, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Asia, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2016.","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-2","issue":"1","issued":{"date-parts":[["2016"]]},"number-of-pages":"27-40","title":"Global Sustainable Investment Review","type":"report","volume":"62"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017; GSIA, 2016)","plainTextFormattedCitation":"(CFA, 2017; GSIA, 2016)","previouslyFormattedCitation":"(CFA, 2017; GSIA, 2016)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017; GSIA, 2016). A negative screen policy can be applied at the organisation or portfolio level and is usually implemented prior to any deep investment analysis ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Orsagh","given":"Matt","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Allen","given":"James","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Sloggett","given":"Justin","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Georgieva","given":"Anna","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bartholdy","given":"Sofia","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Douma","given":"Kris","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"177","title":"Guidance and Case Studies for Esg Integration: Equities and Fixed Income","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Orsagh et al., 2018)","plainTextFormattedCitation":"(Orsagh et al., 2018)","previouslyFormattedCitation":"(Orsagh et al., 2018)"},"properties":{"noteIndex":0},"schema":""}(Orsagh et al., 2018). This type of sustainable investment strategy can be further categorised into two sub-approaches: values-based and norms-based screening. Values-based screening involves unconditional exclusions of companies or sectors that do not align with a set of moral or ethical principles ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017)","plainTextFormattedCitation":"(CFA, 2017)","previouslyFormattedCitation":"(CFA, 2017)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017). Norms-based screening is the conditional exclusion of companies or sectors that fail to abide by types of ESG standards such as the UN Global Compact or ILO conventions ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017)","plainTextFormattedCitation":"(CFA, 2017)","previouslyFormattedCitation":"(CFA, 2017)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017). In contrast to negative screening, best-in-class ESG investing does not reduce the investible universe of securities through exclusions but instead selects the best performing opportunities within a peer group ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]},{"id":"ITEM-2","itemData":{"ISBN":"9781909293533","abstract":"The Short Guide to Sustainable Investing showcases funds and strategies that are Delivering outperformance and offers a practical guide to constructing a sustainable portfolio.","author":[{"dropping-particle":"","family":"Krosinsky","given":"Cary","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-2","issued":{"date-parts":[["2013"]]},"number-of-pages":"71","publisher":"Do? Sustainability","title":"The short guide to sustainable investing","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017; Krosinsky, 2013)","plainTextFormattedCitation":"(CFA, 2017; Krosinsky, 2013)","previouslyFormattedCitation":"(CFA, 2017; Krosinsky, 2013)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017; Krosinsky, 2013). A peer group can be defined at the project, company, industry, or even the investible universe level. This strategy can manifest in many forms depending on the asset manager’s choice of criteria, such as whether to define best in class based on absolute measures of ESG performance or an acceleration of recent improvements ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Eurosif","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"title":"European SRI Study 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Eurosif, 2018)","plainTextFormattedCitation":"(Eurosif, 2018)","previouslyFormattedCitation":"(Eurosif, 2018)"},"properties":{"noteIndex":0},"schema":""}(Eurosif, 2018). Best-in-class can often be informed by ESG ratings agencies and the reports and company rankings that they publish. While most sustainable investment strategies are executed pre-investment decision, active ownership is a post-investment, ongoing engagement process with the aim of improving the ESG performance of a security over time. There are two main categories of active ownership: exercising voting rights, and shareholder engagement. Exercising voting rights to encourage good governance and social responsibility within a company is an important lever for investors to shape good decision making and is claimed to be a fiduciary duty of responsible, long-term investors ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Orsagh","given":"Matt","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Allen","given":"James","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Sloggett","given":"Justin","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Georgieva","given":"Anna","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bartholdy","given":"Sofia","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Douma","given":"Kris","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"177","title":"Guidance and Case Studies for Esg Integration: Equities and Fixed Income","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Orsagh et al., 2018)","plainTextFormattedCitation":"(Orsagh et al., 2018)","previouslyFormattedCitation":"(Orsagh et al., 2018)"},"properties":{"noteIndex":0},"schema":""}(Orsagh et al., 2018). In addition to voting, investors have opportunities to engage with companies in between these key milestones. This involves regular interaction with management of portfolio companies on ESG related issues ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Eurosif","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"title":"European SRI Study 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Eurosif, 2018)","plainTextFormattedCitation":"(Eurosif, 2018)","previouslyFormattedCitation":"(Eurosif, 2018)"},"properties":{"noteIndex":0},"schema":""}(Eurosif, 2018). From an investor’s perspective this can be an opportunity to share expertise, mitigate a company’s reputational risk, and even collect additional information which may be useful for follow-on investment decisions ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2015, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2014, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Asia, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2016.","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"1","issued":{"date-parts":[["2016"]]},"number-of-pages":"27-40","title":"Global Sustainable Investment Review","type":"report","volume":"62"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2016)","plainTextFormattedCitation":"(GSIA, 2016)","previouslyFormattedCitation":"(GSIA, 2016)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2016). Integrated ESG analysis is one of the most quantitatively intensive ESG investment strategies, although it can also include some qualitative considerations. It is an investment strategy where ESG factors are explicitly considered alongside financial factors in a process very similar to traditional financial analysis ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1080/20430795.2016.1176425","ISSN":"20430809","PMID":"19717154","abstract":"True ESG integration means ESG factors are systematically fed into the valuation models and investment decisions of analysts and PMs. However, most ESG approaches fail to do this. As a result, sustainable investing is much less an application success than a marketing success. Our Value Driver Adjustment (VDA) approach is different: it ties into traditional valuation approaches by linking ESG issues to value drivers via their impact on business models and competitive positions. For equities, the initial results find that the average target price impact of ESG factors is 5% overall, and 10% conditional on non-zero adjustments; dispersion is wide as target price changes ranged from -23% to 71%. The investment team has experienced a pay-off in terms of more in-depth analysis of companies, a clearer view on risk and better informed decisions.","author":[{"dropping-particle":"","family":"Schramade","given":"Willem","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-1","issue":"2","issued":{"date-parts":[["2016"]]},"page":"95-111","publisher":"Taylor & Francis","title":"Integrating ESG into valuation models and investment decisions: the value-driver adjustment approach","type":"article-journal","volume":"6"},"uris":[""]}],"mendeley":{"formattedCitation":"(Schramade, 2016)","plainTextFormattedCitation":"(Schramade, 2016)","previouslyFormattedCitation":"(Schramade, 2016)"},"properties":{"noteIndex":0},"schema":""}(Schramade, 2016). This type of analysis can have two approaches depending if the investor is a fundamental investor or a quant investor. The fundamental approach to integrated analysis involves the adjustment of key stock price drivers based on identified sources of ESG risk and opportunity ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"This document – produced by the PRI Listed Equities ESG Integration Working Group - focuses on fundamental equity analysis and the contribution that analysis of ESG factors can make towards an accurate valuation of a listed company. Throughout this document this is referred to as integrated analysis. The document showcases integrated analysis from several of the world’s leading financial institutions. It is designed to give an indication of the nature and quality of analysis available to investors seeking to make integrated investment decisions. The structure of the document follows that of a stylised stock review. We use five stages from analysis of the economies in which a company operates, through the industries in which it operates, the way it conducts its operations, the financial impacts of those operations and finally the valuation tools used. While few of the pieces we assessed followed this process in its entirety, this structure allows us to highlight innovative analysis and common practices at each stage. The stages and their case studies are summarised in Figure 1. The review found advanced use of integrated analysis in all aspects of fundamental equity valuation, particularly in industry analysis, forecasting earnings and adjusting discount rates. These integrated approaches to estimating fair value point towards significantly improved valuation models that account for scarcity of resources, future regulatory directions and timeframe tensions.","author":[{"dropping-particle":"","family":"PRI","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"February","issued":{"date-parts":[["2013"]]},"page":"1-52","title":"How investors are addressing environmental, social and governance factors in fundamental equity valuation","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(PRI, 2013)","plainTextFormattedCitation":"(PRI, 2013)","previouslyFormattedCitation":"(PRI, 2013)"},"properties":{"noteIndex":0},"schema":""}(PRI, 2013). Specifically, this can result in the ESG factors adjusting the forecasted financials (e.g. capital expenditure, revenue, operating cost) or company valuation models (e.g. discounted cash flow or adjusted present value model) ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"The PRI's Fixed Income Case Study series highlights examples of interesting and innovative approaches to responsible investment. Written by fixed income practitioners from around the world, the case studies cover topics such as integrating ESG, negative and positive screening, thematic investment and engagement. Sharing these examples will enable investors to collectively build a concept of emerging good practice. The PRI aims to publish a set of these short pieces every quarter. If you would like to learn more or contribute your own case study please contact us. NAME KfW ORGANISATION TYPE Development Bank HEADQUARTERS Germany KfW is one of the leading promotional banks in the world – our business activities and social responsibility go hand in hand. Our financing activities support sustainable development in order to improve economic, environmental and social living conditions locally as well as on a global level. We also take on responsibility as an institutional investor, have signed the PRI in 2006 and implemented a sustainable investment approach. By issuing and investing in green bonds we aim to develop this new market segment in order to increase the capital market activities with regard to environmental and climate protection. 2 WHY GREEN BONDS? Investing in green bonds allows fixed income investors to support efforts to mitigate climate change while maintaining returns. We have committed to support a transition to a low carbon economy by financing projects in the field of environmental and climate protection. We also see increasing investor awareness of more sustainable behaviour and are looking to meet increasing demand for sustainable investment products.","author":[{"dropping-particle":"","family":"Sloggett","given":"Justin","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2016"]]},"number-of-pages":"116","title":"A practical guide to ESG integration for equity investing","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Sloggett, 2016)","plainTextFormattedCitation":"(Sloggett, 2016)","previouslyFormattedCitation":"(Sloggett, 2016)"},"properties":{"noteIndex":0},"schema":""}(Sloggett, 2016). The quant approach to integrated analysis uses statistics to predict correlations between ESG performance of a company and financial outcomes ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017)","plainTextFormattedCitation":"(CFA, 2017)","previouslyFormattedCitation":"(CFA, 2017)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017). Quant investment managers, who select investments by building models using variables such as size, volatility and growth, will also incorporate variables associated with ESG performance in an effort to find hidden relationships between material ESG factors and future price appreciation ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Orsagh","given":"Matt","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Allen","given":"James","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Sloggett","given":"Justin","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Georgieva","given":"Anna","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bartholdy","given":"Sofia","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Douma","given":"Kris","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"177","title":"Guidance and Case Studies for Esg Integration: Equities and Fixed Income","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Orsagh et al., 2018)","plainTextFormattedCitation":"(Orsagh et al., 2018)","previouslyFormattedCitation":"(Orsagh et al., 2018)"},"properties":{"noteIndex":0},"schema":""}(Orsagh et al., 2018). In both approaches of integrated analysis, the investor is finding innovative was of integrating an ESG data set into established mainstream investment techniques. Sustainable thematic investing seeks to allocate capital around market themes such as renewable energy or sustainable agriculture that have a clear thesis of supporting sustainable societal outcomes ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2139/ssrn.2925310","abstract":"Using survey data from a sample of senior investment professionals from mainstream (i.e. not SRI funds) investment organizations we provide insights into why and how investors use reported environmental, social and governance (ESG) information. The primary reason survey respondents consider ESG information in investment decisions is because they consider it financially material to investment performance. ESG information is perceived to provide information primarily about risk rather than a company's competitive positioning. There is no one size fits all, with the financial materiality of different ESG issues varying across sectors. Lack of comparability due to the lack of reporting standards is the primary impediment to the use of ESG information. Most frequently, the information is used to screen companies with the most often used method being negative screening. However, negative screening is perceived as the least investment beneficial while full integration into stock valuation and positive screening considered more beneficial. Respondents expect negative screening to be used less in the future, while positive screening and active ownership to be used more.","author":[{"dropping-particle":"","family":"Amel-Zadeh","given":"Amir","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Serafeim","given":"George","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"SSRN Electronic Journal","id":"ITEM-1","issued":{"date-parts":[["2017"]]},"page":"87-104","title":"Why and How Investors Use ESG Information: Evidence from a Global Survey","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amel-Zadeh & Serafeim, 2017)","plainTextFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)","previouslyFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)"},"properties":{"noteIndex":0},"schema":""}(Amel-Zadeh & Serafeim, 2017). The investment thesis follows the logic that secular trends or long-term societal changes will benefit a subsegment of companies going forward and these companies have the potential for both superior long-term growth and positive social and environmental impact ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017)","plainTextFormattedCitation":"(CFA, 2017)","previouslyFormattedCitation":"(CFA, 2017)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017). There are generally two layers of a company that qualifies as a sustainable thematic investment candidate. First, the company develops products or services that address a social or environmental challenge. Addressing a social challenge could come in the form of the provision of affordable housing for a vulnerable population. Addressing an environmental challenge could come in the form of supporting the production of renewable energy technologies. Second, the company takes steps to mitigate its operational impact ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017)","plainTextFormattedCitation":"(CFA, 2017)","previouslyFormattedCitation":"(CFA, 2017)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017). An example of this is when a company reduces its energy consumption or wastewater in its value-chain operations.Finally, impact investing is considered to be the most concerned with creating positive social and environmental impact and has some of the most stringent sustainability standards that inform its investment approach. While there is some debate as to the exact definition of impact investing, there is much agreement that it usually incorporates the three key elements of intentionality, measurability, and additionality ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"This report presents findings from the Global Impact Investing Network’s eighth Annual Impact Investor Survey. These findings reflect 229 respondents’ perspectives on the growth and development of the impact investing industry. The report includes analysis of respondents’ investment activity, asset allocations, impact measurement practices, and performance. For the first time, the report also presents trends analysis for a subset of 82 respondents that participated in the survey in 2013 and again this year. Major market developments over the course of 2017 are also described throughout the report.","author":[{"dropping-particle":"","family":"GIIN","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"language":"English","title":"Annual Impact Investor Survey 2018: The Eighth Edition","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GIIN, 2018)","plainTextFormattedCitation":"(GIIN, 2018)","previouslyFormattedCitation":"(GIIN, 2018)"},"properties":{"noteIndex":0},"schema":""}(GIIN, 2018). Impact investing demonstrates an intention to achieve positive impact by structuring the investment philosophy and strategy around creating positive social and/or environmental change ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017)","plainTextFormattedCitation":"(CFA, 2017)","previouslyFormattedCitation":"(CFA, 2017)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017). There is also a commitment to measuring this impact so that the investors are accountable to these key performance indicators. According to the IRIS metric catalogue, these impact metrics should be analysed in recommended sets and according to specific objectives ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"URL":"","accessed":{"date-parts":[["2019","6","17"]]},"author":[{"dropping-particle":"","family":"IRIS","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"IRIS Catalog of Metrics | IRIS+ System","type":"webpage"},"uris":[""]}],"mendeley":{"formattedCitation":"(IRIS, 2019)","plainTextFormattedCitation":"(IRIS, 2019)","previouslyFormattedCitation":"(IRIS, 2019)"},"properties":{"noteIndex":0},"schema":""}(IRIS, 2019). Additionality can be the most contentious characteristic of impact investing because it is so difficult to prove that without the investment the benefits of the project or company would not have materialised. Regardless, the underlying additionality objective is to maximise the catalytic effect of the funds ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"This report presents findings from the Global Impact Investing Network’s eighth Annual Impact Investor Survey. These findings reflect 229 respondents’ perspectives on the growth and development of the impact investing industry. The report includes analysis of respondents’ investment activity, asset allocations, impact measurement practices, and performance. For the first time, the report also presents trends analysis for a subset of 82 respondents that participated in the survey in 2013 and again this year. Major market developments over the course of 2017 are also described throughout the report.","author":[{"dropping-particle":"","family":"GIIN","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"language":"English","title":"Annual Impact Investor Survey 2018: The Eighth Edition","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GIIN, 2018)","plainTextFormattedCitation":"(GIIN, 2018)","previouslyFormattedCitation":"(GIIN, 2018)"},"properties":{"noteIndex":0},"schema":""}(GIIN, 2018). Impact investing can be pursued in developed or developing countries and provide a spectrum of financial returns from concessionary returns to above market-rate returns ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017)","plainTextFormattedCitation":"(CFA, 2017)","previouslyFormattedCitation":"(CFA, 2017)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017). For the purposes of this research, the discussion will focus on impact investment practitioners that achieve at least market-rate returns. Adoption Trends Overall it appears that sustainable investing is on the rise globally. This is occurring in parallel to a growing global consensus with regards to human rights and labour standards and increasing pressure for corporate externalities to be internalised ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"This document – produced by the PRI Listed Equities ESG Integration Working Group - focuses on fundamental equity analysis and the contribution that analysis of ESG factors can make towards an accurate valuation of a listed company. Throughout this document this is referred to as integrated analysis. The document showcases integrated analysis from several of the world’s leading financial institutions. It is designed to give an indication of the nature and quality of analysis available to investors seeking to make integrated investment decisions. The structure of the document follows that of a stylised stock review. We use five stages from analysis of the economies in which a company operates, through the industries in which it operates, the way it conducts its operations, the financial impacts of those operations and finally the valuation tools used. While few of the pieces we assessed followed this process in its entirety, this structure allows us to highlight innovative analysis and common practices at each stage. The stages and their case studies are summarised in Figure 1. The review found advanced use of integrated analysis in all aspects of fundamental equity valuation, particularly in industry analysis, forecasting earnings and adjusting discount rates. These integrated approaches to estimating fair value point towards significantly improved valuation models that account for scarcity of resources, future regulatory directions and timeframe tensions.","author":[{"dropping-particle":"","family":"PRI","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"February","issued":{"date-parts":[["2013"]]},"page":"1-52","title":"How investors are addressing environmental, social and governance factors in fundamental equity valuation","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(PRI, 2013)","plainTextFormattedCitation":"(PRI, 2013)","previouslyFormattedCitation":"(PRI, 2013)"},"properties":{"noteIndex":0},"schema":""}(PRI, 2013). In a global study, where the five main sustainable investment markets (Europe, United States, Canada, Japan, and Australia) were assessed, sustainable investment assets totalled US$30.7 trillion in 2018 ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2017, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2016, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2018. Generally","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-29","title":"Global sustainable investment review 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2018)","plainTextFormattedCitation":"(GSIA, 2018)","previouslyFormattedCitation":"(GSIA, 2018)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2018). This represents a 34% increase in the two years since the last study was conducted in 2016 ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2015, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2014, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Asia, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2016.","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"1","issued":{"date-parts":[["2016"]]},"number-of-pages":"27-40","title":"Global Sustainable Investment Review","type":"report","volume":"62"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2016)","plainTextFormattedCitation":"(GSIA, 2016)","previouslyFormattedCitation":"(GSIA, 2016)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2016). Figure 3-1 shows the percentage of sustainable investing assets by region. Figure STYLEREF 1 \s 3 SEQ Figure \* ARABIC \s 1 1: Proportion of global sustainable investment assets by regionlefttopSource: Adapted from GSIA, 2018Within these assets under management (AUM), there are a number of sustainable investment strategies that are employed. The three strategies with the largest AUM are negative screening (US$19.8 trillion), integrated ESG analysis (US$17.5 trillion) and active ownership (US$9.8 trillion) as can be seen in Figure 3-2 ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2017, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2016, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2018. Generally","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-29","title":"Global sustainable investment review 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2018)","plainTextFormattedCitation":"(GSIA, 2018)","previouslyFormattedCitation":"(GSIA, 2018)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2018). While negative screening continues to represent the most prevalent strategy, it is important to note that integrated ESG analysis is growing faster. Ultimately, these sustainable investment strategies use sustainability data as their inputs, so a key to their success and continued adoption is improvement in data quality. Analysts claim that sustainable investment data is becoming more accessible, accurate and comparable; therefore more investment practitioners are able to incorporate this type of extra-financial information into their investment strategies ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Orsagh","given":"Matt","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Allen","given":"James","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Sloggett","given":"Justin","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Georgieva","given":"Anna","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bartholdy","given":"Sofia","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Douma","given":"Kris","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"177","title":"Guidance and Case Studies for Esg Integration: Equities and Fixed Income","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Orsagh et al., 2018)","plainTextFormattedCitation":"(Orsagh et al., 2018)","previouslyFormattedCitation":"(Orsagh et al., 2018)"},"properties":{"noteIndex":0},"schema":""}(Orsagh et al., 2018). Furthermore, over the next decade, some financial industry stakeholders are predicting a paradigm shift away from the financial centric approach of investment valuation and towards a more holistic set of metrics of measuring value that encompasses extra-financial indicators ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1080/20430795.2012.655889","abstract":"ISSN: 2043-0795 (Print) 2043-0809 (Online) Journal homepage: Companies and investors perceive the value of corporate social responsibility (CSR) differently; companies strive to obtain a com-petitive advantage and long-term value by working strategically with CSR, whereas investors see major barriers of integrating environmental, social and governance (ESG) factors into financial valuation models. Investors' current methods of applying ESG data in a financial valuation are categorized as either a 'single decision model' where only financial data are valued or a 'dual decision model' where both financial data and ESG factors are considered sequentially. As some socially responsible invest-ment funds are able to outperform the market, we argue that the two models identified are insufficient to capture the additional value. On the basis of previous attempts to theoretically link CSR and economic performance, we propose that a new 'integrated decision model' should integrate financial data and ESG factors, but should not be based on existing valuation methods. Moreover, it should pursue a single objective, namely 'value maximization'. A case study on the Danish company Novozymes shows that, in practice, each identified group of the interviewed investors value ESG data differently. One sophisticated investor group implicitly integrates ESG factors into a long-term focused valuation, where considerable value is attributed to ESG factors.","author":[{"dropping-particle":"","family":"Nielsen","given":"Kristina Praestbro","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Noergaard","given":"Rikke Winther","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance & Investment","id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Journal of Sustainable Finance & Investment CSR and mainstream investing: a new match? – an analysis of the existing ESG integration methods in theory and practice and the way forward CSR and mainstream investing: a new match? – an analysis of the existin","type":"article-journal","volume":"0795"},"uris":[""]}],"mendeley":{"formattedCitation":"(Nielsen & Noergaard, 2017)","plainTextFormattedCitation":"(Nielsen & Noergaard, 2017)","previouslyFormattedCitation":"(Nielsen & Noergaard, 2017)"},"properties":{"noteIndex":0},"schema":""}(Nielsen & Noergaard, 2017).Figure STYLEREF 1 \s 3 SEQ Figure \* ARABIC \s 1 2: Sustainable investment strategies global growth from 2016-2018 (figures in millions USD)Source: Adapted from GSIA, 2018Within the main sustainable investment regions covered in this research (Europe, United States and Canada) there are some differences in trends worth noting. During the two years from 2016 to 2018, sustainable investments in Europe, United States and Canada grew 11%, 38%, and 42% respectively ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2017, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2016, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2018. Generally","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-29","title":"Global sustainable investment review 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2018)","plainTextFormattedCitation":"(GSIA, 2018)","previouslyFormattedCitation":"(GSIA, 2018)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2018). In Europe the strategy associated with the most capital was negative screens, as opposed to active ownership which dominated in the United States and Canada ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2017, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2016, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2018. Generally","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-29","title":"Global sustainable investment review 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2018)","plainTextFormattedCitation":"(GSIA, 2018)","previouslyFormattedCitation":"(GSIA, 2018)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2018). Around this period of time, the differences also extend to asset manager’s attitudes, since there was more scepticism about sustainable investment benefits from US managers and more optimism from European managers ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1007/s10551-015-2610-8","ISSN":"15730697","abstract":"? 2015, The Author(s). We investigate how conventional asset managers account for environmental, social, and governance (ESG) factors in their investment process. We do so on the basis of an international survey among fund managers. We find that many conventional managers integrate responsible investing in their investment process. Furthermore, we find that ESG information in particular is being used for red flagging and to manage risk. We find that many conventional fund managers have already adopted features of responsible investing in the investment process. Furthermore, we argue and show that ESG investing is highly similar to fundamental investing. We also reveal that there is a substantial difference in the ways in which U.S. and European asset managers view ESG.","author":[{"dropping-particle":"","family":"Duuren","given":"Emiel","non-dropping-particle":"van","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Plantinga","given":"Auke","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Scholtens","given":"Bert","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Business Ethics","id":"ITEM-1","issue":"3","issued":{"date-parts":[["2016"]]},"page":"525-533","publisher":"Springer Netherlands","title":"ESG Integration and the Investment Management Process: Fundamental Investing Reinvented","type":"article-journal","volume":"138"},"uris":[""]}],"mendeley":{"formattedCitation":"(van Duuren, Plantinga, & Scholtens, 2016)","plainTextFormattedCitation":"(van Duuren, Plantinga, & Scholtens, 2016)","previouslyFormattedCitation":"(van Duuren, Plantinga, & Scholtens, 2016)"},"properties":{"noteIndex":0},"schema":""}(van Duuren, Plantinga, & Scholtens, 2016). This may be one of the reasons why sustainable investment make up 49% of the market share in Europe, while only 26% in the United States. In Canada, where the sustainable investment industry has seen impressive growth in recent years, sustainably investments now account for 50% of total professionally managed assets in the country ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2017, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2016, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2018. Generally","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-29","title":"Global sustainable investment review 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2018)","plainTextFormattedCitation":"(GSIA, 2018)","previouslyFormattedCitation":"(GSIA, 2018)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2018).While the category of sustainable investments continues to grow globally, there are greenwashing risks as the industry matures. Some analysts claim that sustainable investing has been more of a marketing success than an impact or application success due to the superficial nature with which ESG factors have been integrated into investment decision processes ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1111/beer.12149","ISSN":"09628770","author":[{"dropping-particle":"","family":"Cetindamar","given":"Dilek","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Ozkazanc-Pan","given":"Banu","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Business Ethics: A European Review","id":"ITEM-1","issue":"3","issued":{"date-parts":[["2017","7","1"]]},"page":"257-270","publisher":"John Wiley & Sons, Ltd (10.1111)","title":"Assessing mission drift at venture capital impact investors","type":"article-journal","volume":"26"},"uris":[""]},{"id":"ITEM-2","itemData":{"DOI":"10.1080/20430795.2016.1176425","ISSN":"20430809","PMID":"19717154","abstract":"True ESG integration means ESG factors are systematically fed into the valuation models and investment decisions of analysts and PMs. However, most ESG approaches fail to do this. As a result, sustainable investing is much less an application success than a marketing success. Our Value Driver Adjustment (VDA) approach is different: it ties into traditional valuation approaches by linking ESG issues to value drivers via their impact on business models and competitive positions. For equities, the initial results find that the average target price impact of ESG factors is 5% overall, and 10% conditional on non-zero adjustments; dispersion is wide as target price changes ranged from -23% to 71%. The investment team has experienced a pay-off in terms of more in-depth analysis of companies, a clearer view on risk and better informed decisions.","author":[{"dropping-particle":"","family":"Schramade","given":"Willem","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-2","issue":"2","issued":{"date-parts":[["2016"]]},"page":"95-111","publisher":"Taylor & Francis","title":"Integrating ESG into valuation models and investment decisions: the value-driver adjustment approach","type":"article-journal","volume":"6"},"uris":[""]}],"mendeley":{"formattedCitation":"(Cetindamar & Ozkazanc-Pan, 2017; Schramade, 2016)","plainTextFormattedCitation":"(Cetindamar & Ozkazanc-Pan, 2017; Schramade, 2016)","previouslyFormattedCitation":"(Cetindamar & Ozkazanc-Pan, 2017; Schramade, 2016)"},"properties":{"noteIndex":0},"schema":""}(Cetindamar & Ozkazanc-Pan, 2017; Schramade, 2016). One indicator of the shallow integration of ESG factors is the dominance of screening approaches that make relatively small adjustments to the investible universe. In this light, it is encouraging to see growth in the strategy of integrated ESG analysis because for significant positive social and environmental impact to occur there needs to be deeper integration of ESG factors into valuation models ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1080/20430795.2016.1176425","ISSN":"20430809","PMID":"19717154","abstract":"True ESG integration means ESG factors are systematically fed into the valuation models and investment decisions of analysts and PMs. However, most ESG approaches fail to do this. As a result, sustainable investing is much less an application success than a marketing success. Our Value Driver Adjustment (VDA) approach is different: it ties into traditional valuation approaches by linking ESG issues to value drivers via their impact on business models and competitive positions. For equities, the initial results find that the average target price impact of ESG factors is 5% overall, and 10% conditional on non-zero adjustments; dispersion is wide as target price changes ranged from -23% to 71%. The investment team has experienced a pay-off in terms of more in-depth analysis of companies, a clearer view on risk and better informed decisions.","author":[{"dropping-particle":"","family":"Schramade","given":"Willem","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-1","issue":"2","issued":{"date-parts":[["2016"]]},"page":"95-111","publisher":"Taylor & Francis","title":"Integrating ESG into valuation models and investment decisions: the value-driver adjustment approach","type":"article-journal","volume":"6"},"uris":[""]}],"mendeley":{"formattedCitation":"(Schramade, 2016)","plainTextFormattedCitation":"(Schramade, 2016)","previouslyFormattedCitation":"(Schramade, 2016)"},"properties":{"noteIndex":0},"schema":""}(Schramade, 2016). There have also been some regulatory steps, in the form of stricter standards and definitions, taken in Europe to address greenwashing and this has led to a decline in market share in the short term at least as some investments previously considered sustainable have been excluded. Total sustainably invested assets in Europe grew by 11% from 2016 to 2018 but the market share declined from 53% to 49% ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2017, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2016, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2018. Generally","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-29","title":"Global sustainable investment review 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2018)","plainTextFormattedCitation":"(GSIA, 2018)","previouslyFormattedCitation":"(GSIA, 2018)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2018). While this may seem like a setback based on the aggregate numbers reported, it is helpful for the sustainable investing industry long-term to increase the stringency and clarity of sustainable investing definitions. Globally, the lack of consensus on what is a sustainable investment and the fact that less than 50% of investors define impact targets, leaves the industry susceptible to greenwashing ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"This report presents findings from the Global Impact Investing Network’s eighth Annual Impact Investor Survey. These findings reflect 229 respondents’ perspectives on the growth and development of the impact investing industry. The report includes analysis of respondents’ investment activity, asset allocations, impact measurement practices, and performance. For the first time, the report also presents trends analysis for a subset of 82 respondents that participated in the survey in 2013 and again this year. Major market developments over the course of 2017 are also described throughout the report.","author":[{"dropping-particle":"","family":"GIIN","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"language":"English","title":"Annual Impact Investor Survey 2018: The Eighth Edition","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GIIN, 2018)","plainTextFormattedCitation":"(GIIN, 2018)","previouslyFormattedCitation":"(GIIN, 2018)"},"properties":{"noteIndex":0},"schema":""}(GIIN, 2018). Impact targets help clarify the investment’s contribution to sustainability focal areas and create a sense of accountability of the investment’s outcomes to mitigate greenwashing. There are some tools to help investment practitioners quantify impact but it will be difficult to effectively gauge impact success without improved measurement, so independent bodies such as the IFC are developing solutions in this area ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"URL":"","accessed":{"date-parts":[["2019","6","17"]]},"author":[{"dropping-particle":"","family":"IFC","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"IFC - International Finance Corporation","type":"webpage"},"uris":[""]}],"mendeley":{"formattedCitation":"(IFC, 2019)","plainTextFormattedCitation":"(IFC, 2019)","previouslyFormattedCitation":"(IFC, 2019)"},"properties":{"noteIndex":0},"schema":""}(IFC, 2019). Financial Performance There is a significant amount of literature that supports a positive correlation between ESG performance and financial performance ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"Purpose: This paper goes beyond whether or not CSR is positive or negative related to financial performance in SMEs. The aim is to explore, analyze and highlight the impact of both the social and the environmental dimension of CSR on SMEs financial performance in Europe and Asia. Furthermore, the study investigates to what extent European SMEs and Asian SMEs differ in regards to the relationship. Additional effort will also be given to different categories within each dimension. Method - The GRI framework is adapted and modified from Chen et al. (2015A; 2015B) with purpose to conduct content analysis of CSR reports, in order to explore the relationship between the social and environmental dimension of CSR and financial performance of European and Asian SMEs. Findings:The paper finds that there is a positive impact of both the social and the environmental dimension of CSR on SMEs financial performance. In addition, the social dimension of CSR indicates to affect the relationship the most. Furthermore, the research provides evidence that CSR in European SMEs to a higher degree impact their financial performance. The findings should be valuable for researchers, managers and stakeholders. Originality: To the best of our knowledge, this is the first paper that uses the GRI framework to provide evidence of both the social and the environmental dimensions of CSR and the relationship with financial performance in European and Asian SMEs","author":[{"dropping-particle":"","family":"Bohlin","given":"Ida","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Wiebe","given":"Jenny","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2016"]]},"title":"Does it Pay for SMEs to be Good and Green ?","type":"article-journal"},"uris":[""]},{"id":"ITEM-2","itemData":{"DOI":"10.1108/PAR-05-2013-0047","ISBN":"0114-0582","ISSN":"20415494","abstract":"Purpose - The purpose of this paper is to examine the association between share prices and the level of corporate social responsibility (CSR) disclosure of large UK companies, using CSR data from an independent firm and a time period and setting (the UK) that coincides with increased legislation and increased public awareness of corporate social and environmental issues. Against a background of increased interest by investors in CSR disclosure, prior mixed results on the association between CSR disclosure and share prices suggest the need for further research that overcome some of the identified limitations of the extant literature. Design/methodology/approach - A modified Ohlson (1995) model is used to examine the relationship between CSR disclosure and share prices among the 100 largest UK companies. Three different measures of CSR disclosure are used to ensure robustness of results. Findings - The paper finds that higher levels of CSR disclosure are associated with higher share prices. Furthermore, the paper provides evidence that CSR disclosure by companies operating in environmentally sensitive industries show a stronger association with share prices than CSR disclosure by companies operating in other industries. The paper concludes that CSR disclosure provides incremental value-relevant information to investors beyond financial accounting information. Originality/value - To the best of our knowledge, this is the first paper to provide evidence of the incremental value of CSR disclosure to share price determination in the UK, a country where CSR disclosure is high on the agenda. Our findings provide evidence that CSR disclosures by companies and, in particular, disclosures following the global reporting initiative (GRI) guidelines, are useful to investors and shareholders, as it is related to share price information. [ABSTRACT FROM AUTHOR]","author":[{"dropping-particle":"","family":"Klerk","given":"Marna","non-dropping-particle":"De","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Villiers","given":"Charl","non-dropping-particle":"de","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Staden","given":"Chris","non-dropping-particle":"van","parse-names":false,"suffix":""}],"container-title":"Pacific Accounting Review","id":"ITEM-2","issue":"2","issued":{"date-parts":[["2015"]]},"page":"208-228","title":"The influence of corporate social responsibility disclosure on share prices: Evidence from the United Kingdom","type":"article-journal","volume":"27"},"uris":[""]},{"id":"ITEM-3","itemData":{"ISBN":"90-5892-132-8","abstract":"Proefschrift Rotterdam.","author":[{"dropping-particle":"","family":"Derwall","given":"Jeroen","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-3","issued":{"date-parts":[["2007"]]},"number-of-pages":"1-258","title":"The Economic Virtues of SRI and CSR","type":"book"},"uris":[""]},{"id":"ITEM-4","itemData":{"author":[{"dropping-particle":"","family":"Clark","given":"Gordon L.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Feiner","given":"Andreas","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Viehs","given":"Michael","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-4","issued":{"date-parts":[["2014"]]},"title":"Arabesque Partners","type":"article-journal"},"uris":[""]},{"id":"ITEM-5","itemData":{"DOI":"10.2139/ssrn.1964011","ISBN":"0025-1909","ISSN":"0025-1909","PMID":"25246403","abstract":"We investigate the effect of a corporate culture of sustainability on multiple facets of corporate behavior and performance outcomes. Using a matched sample of 180 companies, we find that corporations that voluntarily adopted environmental and social policies many years ago – termed as High Sustainability companies – exhibit fundamentally different characteristics from a matched sample of firms that adopted almost none of these policies – termed as Low Sustainability companies. In particular, we find that the boards of directors of these companies are more likely to be responsible for sustainability and top executive incentives are more likely to be a function of sustainability metrics. Moreover, they are more likely to have organized procedures for stakeholder engagement, to be more long-term oriented, and to exhibit more measurement and disclosure of nonfinancial information. Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance. The outperformance is stronger in sectors where the customers are individual consumers instead of companies, companies compete on the basis of brands and reputations, and products significantly depend upon extracting large amounts of natural resources.","author":[{"dropping-particle":"","family":"Eccles","given":"Robert G.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Ioannou","given":"Ioannis","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Serafeim","given":"George","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Ssrn","id":"ITEM-5","issued":{"date-parts":[["2016"]]},"title":"The Impact of Corporate Sustainability on Organizational Processes and Performance","type":"article-journal"},"uris":[""]},{"id":"ITEM-6","itemData":{"DOI":"10.1080/20430795.2015.1118917","ISBN":"0769528295","ISSN":"20430809","PMID":"15956742","abstract":"The search for a relation between environmental, social, and governance (ESG) criteria and corporate financial performance (CFP) can be traced back to the beginning of the 1970s. Scholars and investors have published more than 2,000 empirical studies and several review studies on this relation since then. The largest previous review study analyzes just a fraction of existing primary studies, making findings difficult to generalize. Thus, knowledge on the financial effects of ESG criteria remains fragmented. To overcome this shortcoming, this study extracts all provided primary and secondary data of previous academic review studies. Through doing this, the study combines the findings of about 2,200 individual studies. Hence, this study is by far the most exhaustive overview of academic research on this topic and allows for generalizable statements. The results show that the business case for ESG investing is empirically very well-founded. Roughly 90% of studies find a non-negative ESG-CFP relation. More importantly, the large majority of studies reports positive findings. We highlight that the positive ESG impact on CFP appears stable over time. Promising results are obtained when differentiating for portfolio and non-portfolio studies, regions, and young asset classes for ESG investing such as emerging markets, corporate bonds, and green real estate.","author":[{"dropping-particle":"","family":"Friede","given":"Gunnar","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Busch","given":"Timo","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bassen","given":"Alexander","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-6","issue":"4","issued":{"date-parts":[["2015"]]},"page":"210-233","title":"ESG and financial performance: aggregated evidence from more than 2000 empirical studies","type":"article-journal","volume":"5"},"uris":[""]},{"id":"ITEM-7","itemData":{"abstract":"This report presents findings from the Global Impact Investing Network’s eighth Annual Impact Investor Survey. These findings reflect 229 respondents’ perspectives on the growth and development of the impact investing industry. The report includes analysis of respondents’ investment activity, asset allocations, impact measurement practices, and performance. For the first time, the report also presents trends analysis for a subset of 82 respondents that participated in the survey in 2013 and again this year. Major market developments over the course of 2017 are also described throughout the report.","author":[{"dropping-particle":"","family":"GIIN","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-7","issued":{"date-parts":[["2018"]]},"language":"English","title":"Annual Impact Investor Survey 2018: The Eighth Edition","type":"report"},"uris":[""]},{"id":"ITEM-8","itemData":{"DOI":"10.1080/20430795.2016.1234909","ISSN":"20430809","abstract":"ISSN: 2043-0795 (Print) 2043-0809 (Online) Journal homepage: ABSTRACT Conventional finance wisdom indicates that less risk leads to lower returns. Against this belief, new mathematical analysis, introduced in this article, demonstrates that companies that incorporate Environmental, Social and Fair Governance (ESG) factors show lower volatility in their stock performances than their peers in the same industry, that each industry is affected differently by ESG factors, and that ESG companies generate higher returns. The study assessed, for a period of 2 years, 157 companies listed on the Dow Jones Sustainability Index and 809 that are not.","author":[{"dropping-particle":"","family":"Kumar","given":"Ashwin N. C.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Smith","given":"Camille","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Badis","given":"Le?la","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Wang","given":"Nan","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Ambrosy","given":"Paz","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Tavares","given":"Rodrigo","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-8","issue":"4","issued":{"date-parts":[["2016"]]},"page":"292-300","publisher":"Taylor & Francis","title":"ESG factors and risk-adjusted performance: a new quantitative model","type":"article-journal","volume":"6"},"uris":[""]},{"id":"ITEM-9","itemData":{"DOI":"10.1080/20430795.2012.655889","abstract":"ISSN: 2043-0795 (Print) 2043-0809 (Online) Journal homepage: Companies and investors perceive the value of corporate social responsibility (CSR) differently; companies strive to obtain a com-petitive advantage and long-term value by working strategically with CSR, whereas investors see major barriers of integrating environmental, social and governance (ESG) factors into financial valuation models. Investors' current methods of applying ESG data in a financial valuation are categorized as either a 'single decision model' where only financial data are valued or a 'dual decision model' where both financial data and ESG factors are considered sequentially. As some socially responsible invest-ment funds are able to outperform the market, we argue that the two models identified are insufficient to capture the additional value. On the basis of previous attempts to theoretically link CSR and economic performance, we propose that a new 'integrated decision model' should integrate financial data and ESG factors, but should not be based on existing valuation methods. Moreover, it should pursue a single objective, namely 'value maximization'. A case study on the Danish company Novozymes shows that, in practice, each identified group of the interviewed investors value ESG data differently. One sophisticated investor group implicitly integrates ESG factors into a long-term focused valuation, where considerable value is attributed to ESG factors.","author":[{"dropping-particle":"","family":"Nielsen","given":"Kristina Praestbro","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Noergaard","given":"Rikke Winther","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance & Investment","id":"ITEM-9","issued":{"date-parts":[["2017"]]},"title":"Journal of Sustainable Finance & Investment CSR and mainstream investing: a new match? – an analysis of the existing ESG integration methods in theory and practice and the way forward CSR and mainstream investing: a new match? – an analysis of the existin","type":"article-journal","volume":"0795"},"uris":[""]},{"id":"ITEM-10","itemData":{"DOI":"10.1080/20430795.2016.1176425","ISSN":"20430809","PMID":"19717154","abstract":"True ESG integration means ESG factors are systematically fed into the valuation models and investment decisions of analysts and PMs. However, most ESG approaches fail to do this. As a result, sustainable investing is much less an application success than a marketing success. Our Value Driver Adjustment (VDA) approach is different: it ties into traditional valuation approaches by linking ESG issues to value drivers via their impact on business models and competitive positions. For equities, the initial results find that the average target price impact of ESG factors is 5% overall, and 10% conditional on non-zero adjustments; dispersion is wide as target price changes ranged from -23% to 71%. The investment team has experienced a pay-off in terms of more in-depth analysis of companies, a clearer view on risk and better informed decisions.","author":[{"dropping-particle":"","family":"Schramade","given":"Willem","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-10","issue":"2","issued":{"date-parts":[["2016"]]},"page":"95-111","publisher":"Taylor & Francis","title":"Integrating ESG into valuation models and investment decisions: the value-driver adjustment approach","type":"article-journal","volume":"6"},"uris":[""]},{"id":"ITEM-11","itemData":{"DOI":"10.1504/pie.2008.019127","ISSN":"1476-8917","abstract":"Sustainable investments have become increasingly common in recent years. By reporting their environmental, social and sustainability performance, companies want to present themselves as good corporate citizens and thus, attract investors. However, do sustainability reports really show a fair picture of firms' sustainability work and its outcomes for both sustainable development and financial success? In this study, a sample of 100 companies was analysed using the framework of the Global Reporting Initiative (GRI), with respect to (1) the relation between their environmental, social and sustainability activities and their impact on the environment, the social system and sustainable development and (2) the relation between their nonfinancial performance (environmental, social, sustainability) and their financial performance. The results revealed a positive correlation between the sustainability activities, the impact on sustainable development and the financial performance of the companies.","author":[{"dropping-particle":"","family":"Weber","given":"Olaf","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Koellner","given":"Thomas","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Ohnemus","given":"Peter","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Steffensen","given":"Henrik","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Habegger","given":"Dominique","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Progress in Industrial Ecology, An International Journal","id":"ITEM-11","issue":"3","issued":{"date-parts":[["2008"]]},"page":"236","title":"The relation between the GRI indicators and the financial performance of firms","type":"article-journal","volume":"5"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bohlin & Wiebe, 2016; Clark et al., 2014; De Klerk et al., 2015; Derwall, 2007; Eccles et al., 2016; Friede et al., 2015; GIIN, 2018; Kumar et al., 2016; Nielsen & Noergaard, 2017; Schramade, 2016; Weber et al., 2008)","plainTextFormattedCitation":"(Bohlin & Wiebe, 2016; Clark et al., 2014; De Klerk et al., 2015; Derwall, 2007; Eccles et al., 2016; Friede et al., 2015; GIIN, 2018; Kumar et al., 2016; Nielsen & Noergaard, 2017; Schramade, 2016; Weber et al., 2008)","previouslyFormattedCitation":"(Bohlin & Wiebe, 2016; Clark et al., 2014; De Klerk et al., 2015; Derwall, 2007; Eccles et al., 2016; Friede et al., 2015; GIIN, 2018; Kumar et al., 2016; Nielsen & Noergaard, 2017; Schramade, 2016; Weber et al., 2008)"},"properties":{"noteIndex":0},"schema":""}(Bohlin & Wiebe, 2016; Clark et al., 2014; De Klerk et al., 2015; Derwall, 2007; Eccles et al., 2016; Friede et al., 2015; GIIN, 2018; Kumar et al., 2016; Nielsen & Noergaard, 2017; Schramade, 2016; Weber et al., 2008) Within the literature that supports findings of a positive relationship, there is a spectrum of claims with regards to their confidence and magnitude of connection. On the more conservative side of the spectrum, Derwall concludes that implementing corporate social responsibility (CSR) does not negatively affect corporate financial performance (CFP) and is therefore at least as good as business as usual ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"90-5892-132-8","abstract":"Proefschrift Rotterdam.","author":[{"dropping-particle":"","family":"Derwall","given":"Jeroen","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2007"]]},"number-of-pages":"1-258","title":"The Economic Virtues of SRI and CSR","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(Derwall, 2007)","plainTextFormattedCitation":"(Derwall, 2007)","previouslyFormattedCitation":"(Derwall, 2007)"},"properties":{"noteIndex":0},"schema":""}(Derwall, 2007). Next there is research that claims that sustainability actions do not have negative or neutral impact and it is just a matter of what degree they have a positive impact on CFP ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2139/ssrn.2221455","abstract":"The start of the 2000s saw a flurry of international publications on “the business case” for sustainability, seeking to map out the returns on investment and to differentiate recommended actions from cases of corporate philanthropy. Reports by business organisations and others identified different categories of justifications, incentives, benefits and levels of making the business case. 1) Research over the last decade has pointed to a complex relation between sustainability and financial performance. 2) Results have been influenced by different input and output variables applied, by what is defined as: “sustainability” or “socially responsible” actions, the scope of the agenda covered and the definition of what is the ultimate goal (e.g. increased profit, shareholder value or longer term success and value of the business).","author":[{"dropping-particle":"","family":"Bertoneche","given":"Marc","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Lugt","given":"Cornis","non-dropping-particle":"van der","parse-names":false,"suffix":""}],"container-title":"Ssrn","id":"ITEM-1","issued":{"date-parts":[["2013"]]},"title":"Finding the God Particle of the Sustainability Business Case: Greener Pastures for Shareholder Value","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bertoneche & van der Lugt, 2013)","plainTextFormattedCitation":"(Bertoneche & van der Lugt, 2013)","previouslyFormattedCitation":"(Bertoneche & van der Lugt, 2013)"},"properties":{"noteIndex":0},"schema":""}(Bertoneche & van der Lugt, 2013). Finally, there are bolder claims that high sustainability companies significantly outperform their counterparts in terms of long-term stock price and accounting performance ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2139/ssrn.1964011","ISBN":"0025-1909","ISSN":"0025-1909","PMID":"25246403","abstract":"We investigate the effect of a corporate culture of sustainability on multiple facets of corporate behavior and performance outcomes. Using a matched sample of 180 companies, we find that corporations that voluntarily adopted environmental and social policies many years ago – termed as High Sustainability companies – exhibit fundamentally different characteristics from a matched sample of firms that adopted almost none of these policies – termed as Low Sustainability companies. In particular, we find that the boards of directors of these companies are more likely to be responsible for sustainability and top executive incentives are more likely to be a function of sustainability metrics. Moreover, they are more likely to have organized procedures for stakeholder engagement, to be more long-term oriented, and to exhibit more measurement and disclosure of nonfinancial information. Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance. The outperformance is stronger in sectors where the customers are individual consumers instead of companies, companies compete on the basis of brands and reputations, and products significantly depend upon extracting large amounts of natural resources.","author":[{"dropping-particle":"","family":"Eccles","given":"Robert G.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Ioannou","given":"Ioannis","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Serafeim","given":"George","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Ssrn","id":"ITEM-1","issued":{"date-parts":[["2016"]]},"title":"The Impact of Corporate Sustainability on Organizational Processes and Performance","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Eccles et al., 2016)","plainTextFormattedCitation":"(Eccles et al., 2016)","previouslyFormattedCitation":"(Eccles et al., 2016)"},"properties":{"noteIndex":0},"schema":""}(Eccles et al., 2016). All of these studies constitute ex post analyses and are therefore backward looking. Historical data is not necessarily indicative of future results and investment practitioners have the challenging task of interpreting how to best use historical information within the present context and while taking into account trends going forward. In contrast to the positive correlation claims, there is some literature that provides a sceptical point of view ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1007/s10551-010-0633-8","ISSN":"01674544","abstract":"The link between Corporate Social Responsibility (CSR) and financial performance has continued to generate mixed and inconclusive results. Most studies in this area seem to assume that corporate social and financial performance share the same under- pinning logic. Drawing from a qualitative analysis of practitioners’ accounts of the challenges of mainstreaming the market for responsible investments, as part of the broader CSR agenda, this article re-examines this taken- for-granted assumption in the extant literature, and reaches the conclusion that CSR, as a complex private governance of externalities, does not easily lend itself to measurability and profitability. In other words, not everything about CSR is measurable and profitable as much as the financial markets would expect. Comparing what is rendered measurable and profitable, on one hand, and what is yet to fully lend itself to measurability and profitability, on the other, is identified as one of the fundamental flaws of this literature. As such, CSR and financial performance will continue to run on competing logics until their different markets are distinctively artic- ulated and/or aligned.","author":[{"dropping-particle":"","family":"Amaeshi","given":"Kenneth","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Business Ethics","id":"ITEM-1","issue":"SUPPL 1","issued":{"date-parts":[["2010"]]},"page":"41-56","title":"Different markets for different folks: Exploring the challenges of mainstreaming responsible investment practices","type":"article-journal","volume":"92"},"uris":[""]},{"id":"ITEM-2","itemData":{"DOI":"10.1002/smj.l980","author":[{"dropping-particle":"","family":"Barnett","given":"Michael L.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Salomon","given":"Robert M.","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-2","issue":"11","issued":{"date-parts":[["2012"]]},"page":"1304-1320","title":"DOES IT PAY TO BE \" REALLY \" GOOD ? ADDRESSING THE SHAPE OF THE RELATIONSHIP BETWEEN SOCIAL AND FINANCIAL PERFORMANCE Author ( s ): MICHAEL L . BARNETT and ROBERT M . SALOMON Published by : Wiley Stable URL : DOES IT","type":"article-journal","volume":"33"},"uris":[""]},{"id":"ITEM-3","itemData":{"author":[{"dropping-particle":"","family":"Bassen","given":"Alexander","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Kovacs","given":"Ana Maria","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Corporate Governance","id":"ITEM-3","issue":"0","issued":{"date-parts":[["2008"]]},"page":"182-193","title":"Environmental , Social and Governance Key Performance Indicators from a Capital Market Perspective A LEXANDER B ASSEN AND A NA M ARIA K OV?CS * ?kologische , soziale und Corporate Governance Leistungsindikatoren aus","type":"article-journal"},"uris":[""]},{"id":"ITEM-4","itemData":{"DOI":"10.1177/1086026615620238","ISSN":"1086-0266","abstract":"While corporate sustainability has been defined as an approach that creates long-term value with minimum environmental damage, there is still little understanding of the time horizon over which improved environmental performance leads to improved financial performance. We investigate the relationship between environmental and financial performance under increasing likelihood of environmental regulation. We leverage longitudinal data for 1,095 U.S. corporations from 2004 to 2008, a period of increasing activity for climate change legislation, in order to estimate the effect of greenhouse gas emissions on short- and long-term measures of financial performance. We find that during this period, improving corporate environmental performance causes a decline in an indicator of short-term financial performance, return on assets. Nonetheless, investors see the potential long-term value of improved environmental performance, manifested by an increase in Tobin’s q. These results suggest that limited uptake of proac...","author":[{"dropping-particle":"","family":"Delmas","given":"Magali A.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Nairn-Birch","given":"Nicholas","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Lim","given":"Jinghui","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Organization & Environment","id":"ITEM-4","issue":"4","issued":{"date-parts":[["2015"]]},"page":"374-393","title":"Dynamics of Environmental and Financial Performance","type":"article-journal","volume":"28"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amaeshi, 2010; Barnett & Salomon, 2012; Bassen & Kovacs, 2008; Delmas, Nairn-Birch, & Lim, 2015)","plainTextFormattedCitation":"(Amaeshi, 2010; Barnett & Salomon, 2012; Bassen & Kovacs, 2008; Delmas, Nairn-Birch, & Lim, 2015)","previouslyFormattedCitation":"(Amaeshi, 2010; Barnett & Salomon, 2012; Bassen & Kovacs, 2008; Delmas, Nairn-Birch, & Lim, 2015)"},"properties":{"noteIndex":0},"schema":""}(Amaeshi, 2010; Barnett & Salomon, 2012; Bassen & Kovacs, 2008; Delmas, Nairn-Birch, & Lim, 2015). Amaeshi for example, lays out a detailed argument for why CSR is not easily measured and linked to profitability due to its often qualitative and complex ethical nature ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1007/s10551-010-0633-8","ISSN":"01674544","abstract":"The link between Corporate Social Responsibility (CSR) and financial performance has continued to generate mixed and inconclusive results. Most studies in this area seem to assume that corporate social and financial performance share the same under- pinning logic. Drawing from a qualitative analysis of practitioners’ accounts of the challenges of mainstreaming the market for responsible investments, as part of the broader CSR agenda, this article re-examines this taken- for-granted assumption in the extant literature, and reaches the conclusion that CSR, as a complex private governance of externalities, does not easily lend itself to measurability and profitability. In other words, not everything about CSR is measurable and profitable as much as the financial markets would expect. Comparing what is rendered measurable and profitable, on one hand, and what is yet to fully lend itself to measurability and profitability, on the other, is identified as one of the fundamental flaws of this literature. As such, CSR and financial performance will continue to run on competing logics until their different markets are distinctively artic- ulated and/or aligned.","author":[{"dropping-particle":"","family":"Amaeshi","given":"Kenneth","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Business Ethics","id":"ITEM-1","issue":"SUPPL 1","issued":{"date-parts":[["2010"]]},"page":"41-56","title":"Different markets for different folks: Exploring the challenges of mainstreaming responsible investment practices","type":"article-journal","volume":"92"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amaeshi, 2010)","plainTextFormattedCitation":"(Amaeshi, 2010)","previouslyFormattedCitation":"(Amaeshi, 2010)"},"properties":{"noteIndex":0},"schema":""}(Amaeshi, 2010); however, the author does not claim that CSR performance can’t contribute to financial performance. Other research makes assertions of inconclusiveness, stating that more evidence is required before a direct causal link between ESG and CFP can be universally confirmed or refuted ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Bassen","given":"Alexander","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Kovacs","given":"Ana Maria","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Corporate Governance","id":"ITEM-1","issue":"0","issued":{"date-parts":[["2008"]]},"page":"182-193","title":"Environmental , Social and Governance Key Performance Indicators from a Capital Market Perspective A LEXANDER B ASSEN AND A NA M ARIA K OV?CS * ?kologische , soziale und Corporate Governance Leistungsindikatoren aus","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bassen & Kovacs, 2008)","plainTextFormattedCitation":"(Bassen & Kovacs, 2008)","previouslyFormattedCitation":"(Bassen & Kovacs, 2008)"},"properties":{"noteIndex":0},"schema":""}(Bassen & Kovacs, 2008). Under some circumstances, there is even evidence of a negative relationship between corporate environmental performance (CEP) and CFP ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1177/1086026615620238","ISSN":"1086-0266","abstract":"While corporate sustainability has been defined as an approach that creates long-term value with minimum environmental damage, there is still little understanding of the time horizon over which improved environmental performance leads to improved financial performance. We investigate the relationship between environmental and financial performance under increasing likelihood of environmental regulation. We leverage longitudinal data for 1,095 U.S. corporations from 2004 to 2008, a period of increasing activity for climate change legislation, in order to estimate the effect of greenhouse gas emissions on short- and long-term measures of financial performance. We find that during this period, improving corporate environmental performance causes a decline in an indicator of short-term financial performance, return on assets. Nonetheless, investors see the potential long-term value of improved environmental performance, manifested by an increase in Tobin’s q. These results suggest that limited uptake of proac...","author":[{"dropping-particle":"","family":"Delmas","given":"Magali A.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Nairn-Birch","given":"Nicholas","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Lim","given":"Jinghui","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Organization & Environment","id":"ITEM-1","issue":"4","issued":{"date-parts":[["2015"]]},"page":"374-393","title":"Dynamics of Environmental and Financial Performance","type":"article-journal","volume":"28"},"uris":[""]}],"mendeley":{"formattedCitation":"(Delmas et al., 2015)","plainTextFormattedCitation":"(Delmas et al., 2015)","previouslyFormattedCitation":"(Delmas et al., 2015)"},"properties":{"noteIndex":0},"schema":""}(Delmas et al., 2015). An example of this is when time horizon is considered, since it was found that improved CEP caused a decline in CFP over the short-term ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1177/1086026615620238","ISSN":"1086-0266","abstract":"While corporate sustainability has been defined as an approach that creates long-term value with minimum environmental damage, there is still little understanding of the time horizon over which improved environmental performance leads to improved financial performance. We investigate the relationship between environmental and financial performance under increasing likelihood of environmental regulation. We leverage longitudinal data for 1,095 U.S. corporations from 2004 to 2008, a period of increasing activity for climate change legislation, in order to estimate the effect of greenhouse gas emissions on short- and long-term measures of financial performance. We find that during this period, improving corporate environmental performance causes a decline in an indicator of short-term financial performance, return on assets. Nonetheless, investors see the potential long-term value of improved environmental performance, manifested by an increase in Tobin’s q. These results suggest that limited uptake of proac...","author":[{"dropping-particle":"","family":"Delmas","given":"Magali A.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Nairn-Birch","given":"Nicholas","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Lim","given":"Jinghui","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Organization & Environment","id":"ITEM-1","issue":"4","issued":{"date-parts":[["2015"]]},"page":"374-393","title":"Dynamics of Environmental and Financial Performance","type":"article-journal","volume":"28"},"uris":[""]}],"mendeley":{"formattedCitation":"(Delmas et al., 2015)","plainTextFormattedCitation":"(Delmas et al., 2015)","previouslyFormattedCitation":"(Delmas et al., 2015)"},"properties":{"noteIndex":0},"schema":""}(Delmas et al., 2015). This can occur due to the fact that sustainability issues are long term in nature and can take time to unfold. For example, investing in supply chain climate change resiliency initiatives can yield increasing benefits over years or decades as new regulations arise or climate patterns shift. However, the debate is more complex than simply whether ESG performance as a whole has a universally negative or positive impact on financial performance. There is some research that provides significant detail that helps explain some of the nuances in this field of research. One study demonstrated that most ESG indicators do not have a positive correlation with financial performance but some do have a strong correlation with improving innovation performance in companies which has the potential to translate to financial performance ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1016/j.jclepro.2014.02.001","ISBN":"0959-6526","ISSN":"09596526","PMID":"21302327","abstract":"The relationship between environmental management practices (EMPs) and company performance has recently been debated in literature and is of interest for both industrial managers and political decision-makers. This paper investigates the relationship between EMPs and firm performance in manufacturing companies in Sweden, China and India. With the content analysis of Global Reporting Initiative (GRI) reports and financial reports of sample companies, the levels of EMPs and the companies' financial performances were coded. Further statistical assessment was conducted in order to identify patterns and correlations. The results indicate that only selected EMPs have been employed differently in three different countries. Most EMPs clearly do not have a positive correlation with the financial performance; i.e. employing EMPs does not necessarily improve the economic consequence of companies. Nevertheless, a number of EMPs do have a strong correlation with improving innovation performance in various companies. It is also interesting to note that a negative correlation exists between the Environmental standard for suppliers and Sales growth. This is possibly due to increasing operational costs and a delay in market acceptance. This research illustrates the possibility of using standard environmental data from GRI reports as a resource for future studies of EMPs. In order to improve long-term financial performance, this study also suggests that innovation should gain a substantial amount of attention when EMPs are employed.","author":[{"dropping-particle":"","family":"Chen","given":"Lujie","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Tang","given":"Ou","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Feldmann","given":"Andreas","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Cleaner Production","id":"ITEM-1","issued":{"date-parts":[["2015"]]},"page":"36-46","publisher":"Elsevier Ltd","title":"Applying GRI reports for the investigation of environmental management practices and company performance in Sweden, China and India","type":"article-journal","volume":"98"},"uris":[""]}],"mendeley":{"formattedCitation":"(Chen, Tang, & Feldmann, 2015)","plainTextFormattedCitation":"(Chen, Tang, & Feldmann, 2015)","previouslyFormattedCitation":"(Chen, Tang, & Feldmann, 2015)"},"properties":{"noteIndex":0},"schema":""}(Chen, Tang, & Feldmann, 2015). This illuminates a common theme that materiality is an essential element to consider since geography, industry, and company context all influence which ESG indicators will have a financial impact. “Different industries are affected differently by ESG factors and the degree to which they are impacted could serve as stronger guidance in industries for which ESG factors have greater bearing” ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1080/20430795.2016.1234909","ISSN":"20430809","abstract":"ISSN: 2043-0795 (Print) 2043-0809 (Online) Journal homepage: ABSTRACT Conventional finance wisdom indicates that less risk leads to lower returns. Against this belief, new mathematical analysis, introduced in this article, demonstrates that companies that incorporate Environmental, Social and Fair Governance (ESG) factors show lower volatility in their stock performances than their peers in the same industry, that each industry is affected differently by ESG factors, and that ESG companies generate higher returns. The study assessed, for a period of 2 years, 157 companies listed on the Dow Jones Sustainability Index and 809 that are not.","author":[{"dropping-particle":"","family":"Kumar","given":"Ashwin N. C.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Smith","given":"Camille","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Badis","given":"Le?la","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Wang","given":"Nan","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Ambrosy","given":"Paz","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Tavares","given":"Rodrigo","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-1","issue":"4","issued":{"date-parts":[["2016"]]},"page":"292-300","publisher":"Taylor & Francis","title":"ESG factors and risk-adjusted performance: a new quantitative model","type":"article-journal","volume":"6"},"uris":[""]}],"mendeley":{"formattedCitation":"(Kumar et al., 2016)","plainTextFormattedCitation":"(Kumar et al., 2016)","previouslyFormattedCitation":"(Kumar et al., 2016)"},"properties":{"noteIndex":0},"schema":""}(Kumar et al., 2016). Therefore, investors should be selective of which extra-financial information they use if they want to use sustainable investing strategies as a means of outperforming the market. Another study argues that the CSP-CFP relationship is not linear but instead U-shaped ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1002/smj.l980","author":[{"dropping-particle":"","family":"Barnett","given":"Michael L.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Salomon","given":"Robert M.","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"11","issued":{"date-parts":[["2012"]]},"page":"1304-1320","title":"DOES IT PAY TO BE \" REALLY \" GOOD ? ADDRESSING THE SHAPE OF THE RELATIONSHIP BETWEEN SOCIAL AND FINANCIAL PERFORMANCE Author ( s ): MICHAEL L . BARNETT and ROBERT M . SALOMON Published by : Wiley Stable URL : DOES IT","type":"article-journal","volume":"33"},"uris":[""]}],"mendeley":{"formattedCitation":"(Barnett & Salomon, 2012)","plainTextFormattedCitation":"(Barnett & Salomon, 2012)","previouslyFormattedCitation":"(Barnett & Salomon, 2012)"},"properties":{"noteIndex":0},"schema":""}(Barnett & Salomon, 2012). The theory is that firms can be profitable when not spending on CSR, then often become unprofitable initially when investing in CSR before building enough stakeholder influence capacity (SIC), and finally can become profitable once they capitalize on social responsibility efforts and stakeholder favour by developing their SIC ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1002/smj.l980","author":[{"dropping-particle":"","family":"Barnett","given":"Michael L.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Salomon","given":"Robert M.","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"11","issued":{"date-parts":[["2012"]]},"page":"1304-1320","title":"DOES IT PAY TO BE \" REALLY \" GOOD ? ADDRESSING THE SHAPE OF THE RELATIONSHIP BETWEEN SOCIAL AND FINANCIAL PERFORMANCE Author ( s ): MICHAEL L . BARNETT and ROBERT M . SALOMON Published by : Wiley Stable URL : DOES IT","type":"article-journal","volume":"33"},"uris":[""]}],"mendeley":{"formattedCitation":"(Barnett & Salomon, 2012)","plainTextFormattedCitation":"(Barnett & Salomon, 2012)","previouslyFormattedCitation":"(Barnett & Salomon, 2012)"},"properties":{"noteIndex":0},"schema":""}(Barnett & Salomon, 2012). Investments can range from setting up GRI reporting protocols to restructuring a company’s business model. Regardless of the investment type, this theory speaks to the power of communication with stakeholders, especially investors, and their perception of how sustainable a company is. Clearly there is a lot of complexity to consider when explaining the relationship between ESG performance and financial performance. In order to gain a higher level, comprehensive perspective of the state of the debate and estimate the proportion of researchers with different schools of thought, it is helpful to review meta-analysis research. A review of academic research covering 2,200 studies showed that 90% of studies found a nonnegative ESG–financial performance relationship and the majority of studies went beyond this to show a positive correlation ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1080/20430795.2015.1118917","ISBN":"0769528295","ISSN":"20430809","PMID":"15956742","abstract":"The search for a relation between environmental, social, and governance (ESG) criteria and corporate financial performance (CFP) can be traced back to the beginning of the 1970s. Scholars and investors have published more than 2,000 empirical studies and several review studies on this relation since then. The largest previous review study analyzes just a fraction of existing primary studies, making findings difficult to generalize. Thus, knowledge on the financial effects of ESG criteria remains fragmented. To overcome this shortcoming, this study extracts all provided primary and secondary data of previous academic review studies. Through doing this, the study combines the findings of about 2,200 individual studies. Hence, this study is by far the most exhaustive overview of academic research on this topic and allows for generalizable statements. The results show that the business case for ESG investing is empirically very well-founded. Roughly 90% of studies find a non-negative ESG-CFP relation. More importantly, the large majority of studies reports positive findings. We highlight that the positive ESG impact on CFP appears stable over time. Promising results are obtained when differentiating for portfolio and non-portfolio studies, regions, and young asset classes for ESG investing such as emerging markets, corporate bonds, and green real estate.","author":[{"dropping-particle":"","family":"Friede","given":"Gunnar","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Busch","given":"Timo","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bassen","given":"Alexander","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-1","issue":"4","issued":{"date-parts":[["2015"]]},"page":"210-233","title":"ESG and financial performance: aggregated evidence from more than 2000 empirical studies","type":"article-journal","volume":"5"},"uris":[""]}],"mendeley":{"formattedCitation":"(Friede et al., 2015)","plainTextFormattedCitation":"(Friede et al., 2015)","previouslyFormattedCitation":"(Friede et al., 2015)"},"properties":{"noteIndex":0},"schema":""}(Friede et al., 2015). Furthermore, the positive impact that was found seemed to be stable over time, demonstrating the sustainability of the financial improvement ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1080/20430795.2015.1118917","ISBN":"0769528295","ISSN":"20430809","PMID":"15956742","abstract":"The search for a relation between environmental, social, and governance (ESG) criteria and corporate financial performance (CFP) can be traced back to the beginning of the 1970s. Scholars and investors have published more than 2,000 empirical studies and several review studies on this relation since then. The largest previous review study analyzes just a fraction of existing primary studies, making findings difficult to generalize. Thus, knowledge on the financial effects of ESG criteria remains fragmented. To overcome this shortcoming, this study extracts all provided primary and secondary data of previous academic review studies. Through doing this, the study combines the findings of about 2,200 individual studies. Hence, this study is by far the most exhaustive overview of academic research on this topic and allows for generalizable statements. The results show that the business case for ESG investing is empirically very well-founded. Roughly 90% of studies find a non-negative ESG-CFP relation. More importantly, the large majority of studies reports positive findings. We highlight that the positive ESG impact on CFP appears stable over time. Promising results are obtained when differentiating for portfolio and non-portfolio studies, regions, and young asset classes for ESG investing such as emerging markets, corporate bonds, and green real estate.","author":[{"dropping-particle":"","family":"Friede","given":"Gunnar","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Busch","given":"Timo","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bassen","given":"Alexander","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-1","issue":"4","issued":{"date-parts":[["2015"]]},"page":"210-233","title":"ESG and financial performance: aggregated evidence from more than 2000 empirical studies","type":"article-journal","volume":"5"},"uris":[""]}],"mendeley":{"formattedCitation":"(Friede et al., 2015)","plainTextFormattedCitation":"(Friede et al., 2015)","previouslyFormattedCitation":"(Friede et al., 2015)"},"properties":{"noteIndex":0},"schema":""}(Friede et al., 2015). Another meta-analysis study covering academic studies, industry reports, newspaper articles, and books claimed that 80% of the studies show that the stock price of companies is positively in?uenced by good sustainability practices ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Clark","given":"Gordon L.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Feiner","given":"Andreas","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Viehs","given":"Michael","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2014"]]},"title":"Arabesque Partners","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Clark et al., 2014)","plainTextFormattedCitation":"(Clark et al., 2014)","previouslyFormattedCitation":"(Clark et al., 2014)"},"properties":{"noteIndex":0},"schema":""}(Clark et al., 2014). Since the cost of capital is an important driver of financial performance, another compelling finding is that 90% of studies analyzing this metric found that sustainability practices lowers a company’s cost of capital to some degree ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Clark","given":"Gordon L.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Feiner","given":"Andreas","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Viehs","given":"Michael","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2014"]]},"title":"Arabesque Partners","type":"article-journal"},"uris":[""]},{"id":"ITEM-2","itemData":{"DOI":"10.2308/accr.00000005","abstract":"We examine a potential benefit associated with the initiation of voluntary disclosure of corporate social responsibility (CSR) activities: a reduction in firms' cost of equity capital. We find that firms with a high cost of equity capital in the previous year tend to initiate disclosure of CSR activities in the current year and that initiating firms with superior social responsibility performance enjoy a subsequent reduction in the cost of equity capital. Further, initiating firms with superior social responsibility performance attract dedicated institutional investors and analyst coverage. Moreover, these analysts achieve lower absolute forecast errors and dispersion. Finally, we find that firms exploit the benefit of a lower cost of equity capital associated with the initiation of CSR disclosure. Initiating firms are more likely than non-initiating firms to raise equity capital following the initiations; among firms raising equity capital, initiating firms raise a significantly larger amount than do non-initiating firms. [ABSTRACT FROM AUTHOR]","author":[{"dropping-particle":"","family":"Dhaliwal","given":"Dan S.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Li","given":"Oliver Zhen","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Tsang","given":"Albert","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Yang","given":"Yong George","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"The Accounting Review","id":"ITEM-2","issue":"1","issued":{"date-parts":[["2011","1"]]},"page":"59-100","title":"Voluntary Nonfinancial Disclosure and the Cost of Equity Capital: The Initiation of Corporate Social Responsibility Reporting","type":"article-journal","volume":"86"},"uris":[""]}],"mendeley":{"formattedCitation":"(Clark et al., 2014; Dhaliwal, Li, Tsang, & Yang, 2011)","plainTextFormattedCitation":"(Clark et al., 2014; Dhaliwal, Li, Tsang, & Yang, 2011)","previouslyFormattedCitation":"(Clark et al., 2014; Dhaliwal, Li, Tsang, & Yang, 2011)"},"properties":{"noteIndex":0},"schema":""}(Clark et al., 2014; Dhaliwal, Li, Tsang, & Yang, 2011). These studies demonstrate that researchers in this field generally find a positive correlation between ESG performance and financial performance. It is also interesting to note that generally the studies that indicated a more negative correlation between CEP and CFP are older and more recent studies tend to conclude a positive relationship, indicating a trend that a positive relationship is becoming more prevalent over time. Integration ChallengesIt was common for studies to comment on the challenges of integrating sustainable investment strategies despite the relatively strong business case for including sustainable considerations in investment decision making. Key themes that emerged among these challenges were data constraints, ESG materiality determination, investor characteristics, and the incompatibility of ESG practices with the finance sector. The theme of data constraint challenges has many sub-themes within it. The lack of standardization and comparability across organizations are key issues for financial stakeholders ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"This report presents findings from the Global Impact Investing Network’s eighth Annual Impact Investor Survey. These findings reflect 229 respondents’ perspectives on the growth and development of the impact investing industry. The report includes analysis of respondents’ investment activity, asset allocations, impact measurement practices, and performance. For the first time, the report also presents trends analysis for a subset of 82 respondents that participated in the survey in 2013 and again this year. Major market developments over the course of 2017 are also described throughout the report.","author":[{"dropping-particle":"","family":"GIIN","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"language":"English","title":"Annual Impact Investor Survey 2018: The Eighth Edition","type":"report"},"uris":[""]},{"id":"ITEM-2","itemData":{"author":[{"dropping-particle":"","family":"SASB","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Applied Corporate Finance","id":"ITEM-2","issue":"2","issued":{"date-parts":[["2016"]]},"title":"Applied Corporate Finance","type":"article-journal","volume":"29"},"uris":[""]},{"id":"ITEM-3","itemData":{"DOI":"10.1080/20430795.2012.655889","abstract":"ISSN: 2043-0795 (Print) 2043-0809 (Online) Journal homepage: Companies and investors perceive the value of corporate social responsibility (CSR) differently; companies strive to obtain a com-petitive advantage and long-term value by working strategically with CSR, whereas investors see major barriers of integrating environmental, social and governance (ESG) factors into financial valuation models. Investors' current methods of applying ESG data in a financial valuation are categorized as either a 'single decision model' where only financial data are valued or a 'dual decision model' where both financial data and ESG factors are considered sequentially. As some socially responsible invest-ment funds are able to outperform the market, we argue that the two models identified are insufficient to capture the additional value. On the basis of previous attempts to theoretically link CSR and economic performance, we propose that a new 'integrated decision model' should integrate financial data and ESG factors, but should not be based on existing valuation methods. Moreover, it should pursue a single objective, namely 'value maximization'. A case study on the Danish company Novozymes shows that, in practice, each identified group of the interviewed investors value ESG data differently. One sophisticated investor group implicitly integrates ESG factors into a long-term focused valuation, where considerable value is attributed to ESG factors.","author":[{"dropping-particle":"","family":"Nielsen","given":"Kristina Praestbro","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Noergaard","given":"Rikke Winther","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance & Investment","id":"ITEM-3","issued":{"date-parts":[["2017"]]},"title":"Journal of Sustainable Finance & Investment CSR and mainstream investing: a new match? – an analysis of the existing ESG integration methods in theory and practice and the way forward CSR and mainstream investing: a new match? – an analysis of the existin","type":"article-journal","volume":"0795"},"uris":[""]},{"id":"ITEM-4","itemData":{"author":[{"dropping-particle":"","family":"Bassen","given":"Alexander","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Kovacs","given":"Ana Maria","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Corporate Governance","id":"ITEM-4","issue":"0","issued":{"date-parts":[["2008"]]},"page":"182-193","title":"Environmental , Social and Governance Key Performance Indicators from a Capital Market Perspective A LEXANDER B ASSEN AND A NA M ARIA K OV?CS * ?kologische , soziale und Corporate Governance Leistungsindikatoren aus","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bassen & Kovacs, 2008; GIIN, 2018; Nielsen & Noergaard, 2017; SASB, 2016)","plainTextFormattedCitation":"(Bassen & Kovacs, 2008; GIIN, 2018; Nielsen & Noergaard, 2017; SASB, 2016)","previouslyFormattedCitation":"(Bassen & Kovacs, 2008; GIIN, 2018; Nielsen & Noergaard, 2017; SASB, 2016)"},"properties":{"noteIndex":0},"schema":""}(Bassen & Kovacs, 2008; GIIN, 2018; Nielsen & Noergaard, 2017; SASB, 2016) especially since they are used to standardized, consistent financial data. This is exacerbated by the variation of coverage across regions, the cherry picking of reported ESG indicators, and the range of reporting frameworks ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"SASB","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Applied Corporate Finance","id":"ITEM-1","issue":"2","issued":{"date-parts":[["2016"]]},"title":"Applied Corporate Finance","type":"article-journal","volume":"29"},"uris":[""]}],"mendeley":{"formattedCitation":"(SASB, 2016)","plainTextFormattedCitation":"(SASB, 2016)","previouslyFormattedCitation":"(SASB, 2016)"},"properties":{"noteIndex":0},"schema":""}(SASB, 2016). Timeliness is another issue since extra-financial information is often reported at irregular intervals and is not as up to date as financial data ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Bassen","given":"Alexander","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Kovacs","given":"Ana Maria","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Corporate Governance","id":"ITEM-1","issue":"0","issued":{"date-parts":[["2008"]]},"page":"182-193","title":"Environmental , Social and Governance Key Performance Indicators from a Capital Market Perspective A LEXANDER B ASSEN AND A NA M ARIA K OV?CS * ?kologische , soziale und Corporate Governance Leistungsindikatoren aus","type":"article-journal"},"uris":[""]},{"id":"ITEM-2","itemData":{"DOI":"10.1080/20430795.2012.655889","abstract":"ISSN: 2043-0795 (Print) 2043-0809 (Online) Journal homepage: Companies and investors perceive the value of corporate social responsibility (CSR) differently; companies strive to obtain a com-petitive advantage and long-term value by working strategically with CSR, whereas investors see major barriers of integrating environmental, social and governance (ESG) factors into financial valuation models. Investors' current methods of applying ESG data in a financial valuation are categorized as either a 'single decision model' where only financial data are valued or a 'dual decision model' where both financial data and ESG factors are considered sequentially. As some socially responsible invest-ment funds are able to outperform the market, we argue that the two models identified are insufficient to capture the additional value. On the basis of previous attempts to theoretically link CSR and economic performance, we propose that a new 'integrated decision model' should integrate financial data and ESG factors, but should not be based on existing valuation methods. Moreover, it should pursue a single objective, namely 'value maximization'. A case study on the Danish company Novozymes shows that, in practice, each identified group of the interviewed investors value ESG data differently. One sophisticated investor group implicitly integrates ESG factors into a long-term focused valuation, where considerable value is attributed to ESG factors.","author":[{"dropping-particle":"","family":"Nielsen","given":"Kristina Praestbro","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Noergaard","given":"Rikke Winther","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance & Investment","id":"ITEM-2","issued":{"date-parts":[["2017"]]},"title":"Journal of Sustainable Finance & Investment CSR and mainstream investing: a new match? – an analysis of the existing ESG integration methods in theory and practice and the way forward CSR and mainstream investing: a new match? – an analysis of the existin","type":"article-journal","volume":"0795"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bassen & Kovacs, 2008; Nielsen & Noergaard, 2017)","plainTextFormattedCitation":"(Bassen & Kovacs, 2008; Nielsen & Noergaard, 2017)","previouslyFormattedCitation":"(Bassen & Kovacs, 2008; Nielsen & Noergaard, 2017)"},"properties":{"noteIndex":0},"schema":""}(Bassen & Kovacs, 2008; Nielsen & Noergaard, 2017). The domain of understanding materiality to determine which ESG indicators influence financial indicators is a work in progress. There is an enormous scope of data that is included within the categories of ESG, from GHG emissions (i.e. related to environmental load) to labour practices (i.e. related to business conduct) to genetically modified organisms (i.e. related to environmental risk perceptions) ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1007/s10551-010-0633-8","ISSN":"01674544","abstract":"The link between Corporate Social Responsibility (CSR) and financial performance has continued to generate mixed and inconclusive results. Most studies in this area seem to assume that corporate social and financial performance share the same under- pinning logic. Drawing from a qualitative analysis of practitioners’ accounts of the challenges of mainstreaming the market for responsible investments, as part of the broader CSR agenda, this article re-examines this taken- for-granted assumption in the extant literature, and reaches the conclusion that CSR, as a complex private governance of externalities, does not easily lend itself to measurability and profitability. In other words, not everything about CSR is measurable and profitable as much as the financial markets would expect. Comparing what is rendered measurable and profitable, on one hand, and what is yet to fully lend itself to measurability and profitability, on the other, is identified as one of the fundamental flaws of this literature. As such, CSR and financial performance will continue to run on competing logics until their different markets are distinctively artic- ulated and/or aligned.","author":[{"dropping-particle":"","family":"Amaeshi","given":"Kenneth","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Business Ethics","id":"ITEM-1","issue":"SUPPL 1","issued":{"date-parts":[["2010"]]},"page":"41-56","title":"Different markets for different folks: Exploring the challenges of mainstreaming responsible investment practices","type":"article-journal","volume":"92"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amaeshi, 2010)","plainTextFormattedCitation":"(Amaeshi, 2010)","previouslyFormattedCitation":"(Amaeshi, 2010)"},"properties":{"noteIndex":0},"schema":""}(Amaeshi, 2010). The sheer scope of this data requires analysts to build expertise across a number of disparate fields and subsequently understand how ESG indictors map to financial drivers ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Mccluskey","given":"Amanda","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Keeping good companies","id":"ITEM-1","issue":"April","issued":{"date-parts":[["2010"]]},"page":"136-140","title":"Knowns and unknowns — the challenges for long-term sustainability and responsible investment","type":"article-journal"},"uris":[""]},{"id":"ITEM-2","itemData":{"DOI":"10.2139/ssrn.2221455","abstract":"The start of the 2000s saw a flurry of international publications on “the business case” for sustainability, seeking to map out the returns on investment and to differentiate recommended actions from cases of corporate philanthropy. Reports by business organisations and others identified different categories of justifications, incentives, benefits and levels of making the business case. 1) Research over the last decade has pointed to a complex relation between sustainability and financial performance. 2) Results have been influenced by different input and output variables applied, by what is defined as: “sustainability” or “socially responsible” actions, the scope of the agenda covered and the definition of what is the ultimate goal (e.g. increased profit, shareholder value or longer term success and value of the business).","author":[{"dropping-particle":"","family":"Bertoneche","given":"Marc","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Lugt","given":"Cornis","non-dropping-particle":"van der","parse-names":false,"suffix":""}],"container-title":"Ssrn","id":"ITEM-2","issued":{"date-parts":[["2013"]]},"title":"Finding the God Particle of the Sustainability Business Case: Greener Pastures for Shareholder Value","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bertoneche & van der Lugt, 2013; Mccluskey, 2010)","plainTextFormattedCitation":"(Bertoneche & van der Lugt, 2013; Mccluskey, 2010)","previouslyFormattedCitation":"(Bertoneche & van der Lugt, 2013; Mccluskey, 2010)"},"properties":{"noteIndex":0},"schema":""}(Bertoneche & van der Lugt, 2013; Mccluskey, 2010). This task of determining which ESG indicators are important to a company’s stakeholders and impactful to a company’s short and long-term financial performance is a wide spread challenge that makes it difficult for investors to craft and implement sustainable investment strategies ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Mccluskey","given":"Amanda","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Keeping good companies","id":"ITEM-1","issue":"April","issued":{"date-parts":[["2010"]]},"page":"136-140","title":"Knowns and unknowns — the challenges for long-term sustainability and responsible investment","type":"article-journal"},"uris":[""]},{"id":"ITEM-2","itemData":{"DOI":"10.1080/20430795.2012.655889","abstract":"ISSN: 2043-0795 (Print) 2043-0809 (Online) Journal homepage: Companies and investors perceive the value of corporate social responsibility (CSR) differently; companies strive to obtain a com-petitive advantage and long-term value by working strategically with CSR, whereas investors see major barriers of integrating environmental, social and governance (ESG) factors into financial valuation models. Investors' current methods of applying ESG data in a financial valuation are categorized as either a 'single decision model' where only financial data are valued or a 'dual decision model' where both financial data and ESG factors are considered sequentially. As some socially responsible invest-ment funds are able to outperform the market, we argue that the two models identified are insufficient to capture the additional value. On the basis of previous attempts to theoretically link CSR and economic performance, we propose that a new 'integrated decision model' should integrate financial data and ESG factors, but should not be based on existing valuation methods. Moreover, it should pursue a single objective, namely 'value maximization'. A case study on the Danish company Novozymes shows that, in practice, each identified group of the interviewed investors value ESG data differently. One sophisticated investor group implicitly integrates ESG factors into a long-term focused valuation, where considerable value is attributed to ESG factors.","author":[{"dropping-particle":"","family":"Nielsen","given":"Kristina Praestbro","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Noergaard","given":"Rikke Winther","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance & Investment","id":"ITEM-2","issued":{"date-parts":[["2017"]]},"title":"Journal of Sustainable Finance & Investment CSR and mainstream investing: a new match? – an analysis of the existing ESG integration methods in theory and practice and the way forward CSR and mainstream investing: a new match? – an analysis of the existin","type":"article-journal","volume":"0795"},"uris":[""]},{"id":"ITEM-3","itemData":{"DOI":"10.1080/20430795.2016.1176425","ISSN":"20430809","PMID":"19717154","abstract":"True ESG integration means ESG factors are systematically fed into the valuation models and investment decisions of analysts and PMs. However, most ESG approaches fail to do this. As a result, sustainable investing is much less an application success than a marketing success. Our Value Driver Adjustment (VDA) approach is different: it ties into traditional valuation approaches by linking ESG issues to value drivers via their impact on business models and competitive positions. For equities, the initial results find that the average target price impact of ESG factors is 5% overall, and 10% conditional on non-zero adjustments; dispersion is wide as target price changes ranged from -23% to 71%. The investment team has experienced a pay-off in terms of more in-depth analysis of companies, a clearer view on risk and better informed decisions.","author":[{"dropping-particle":"","family":"Schramade","given":"Willem","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-3","issue":"2","issued":{"date-parts":[["2016"]]},"page":"95-111","publisher":"Taylor & Francis","title":"Integrating ESG into valuation models and investment decisions: the value-driver adjustment approach","type":"article-journal","volume":"6"},"uris":[""]},{"id":"ITEM-4","itemData":{"DOI":"10.2139/ssrn.2221455","abstract":"The start of the 2000s saw a flurry of international publications on “the business case” for sustainability, seeking to map out the returns on investment and to differentiate recommended actions from cases of corporate philanthropy. Reports by business organisations and others identified different categories of justifications, incentives, benefits and levels of making the business case. 1) Research over the last decade has pointed to a complex relation between sustainability and financial performance. 2) Results have been influenced by different input and output variables applied, by what is defined as: “sustainability” or “socially responsible” actions, the scope of the agenda covered and the definition of what is the ultimate goal (e.g. increased profit, shareholder value or longer term success and value of the business).","author":[{"dropping-particle":"","family":"Bertoneche","given":"Marc","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Lugt","given":"Cornis","non-dropping-particle":"van der","parse-names":false,"suffix":""}],"container-title":"Ssrn","id":"ITEM-4","issued":{"date-parts":[["2013"]]},"title":"Finding the God Particle of the Sustainability Business Case: Greener Pastures for Shareholder Value","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bertoneche & van der Lugt, 2013; Mccluskey, 2010; Nielsen & Noergaard, 2017; Schramade, 2016)","plainTextFormattedCitation":"(Bertoneche & van der Lugt, 2013; Mccluskey, 2010; Nielsen & Noergaard, 2017; Schramade, 2016)","previouslyFormattedCitation":"(Bertoneche & van der Lugt, 2013; Mccluskey, 2010; Nielsen & Noergaard, 2017; Schramade, 2016)"},"properties":{"noteIndex":0},"schema":""}(Bertoneche & van der Lugt, 2013; Mccluskey, 2010; Nielsen & Noergaard, 2017; Schramade, 2016). Further complicating matters are the characteristics of financial stakeholders. There is a shortage of people with expertise in integrating sustainability issues into the investment process ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1080/20430795.2015.1118917","ISBN":"0769528295","ISSN":"20430809","PMID":"15956742","abstract":"The search for a relation between environmental, social, and governance (ESG) criteria and corporate financial performance (CFP) can be traced back to the beginning of the 1970s. Scholars and investors have published more than 2,000 empirical studies and several review studies on this relation since then. The largest previous review study analyzes just a fraction of existing primary studies, making findings difficult to generalize. Thus, knowledge on the financial effects of ESG criteria remains fragmented. To overcome this shortcoming, this study extracts all provided primary and secondary data of previous academic review studies. Through doing this, the study combines the findings of about 2,200 individual studies. Hence, this study is by far the most exhaustive overview of academic research on this topic and allows for generalizable statements. The results show that the business case for ESG investing is empirically very well-founded. Roughly 90% of studies find a non-negative ESG-CFP relation. More importantly, the large majority of studies reports positive findings. We highlight that the positive ESG impact on CFP appears stable over time. Promising results are obtained when differentiating for portfolio and non-portfolio studies, regions, and young asset classes for ESG investing such as emerging markets, corporate bonds, and green real estate.","author":[{"dropping-particle":"","family":"Friede","given":"Gunnar","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Busch","given":"Timo","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bassen","given":"Alexander","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-1","issue":"4","issued":{"date-parts":[["2015"]]},"page":"210-233","title":"ESG and financial performance: aggregated evidence from more than 2000 empirical studies","type":"article-journal","volume":"5"},"uris":[""]},{"id":"ITEM-2","itemData":{"author":[{"dropping-particle":"","family":"Mccluskey","given":"Amanda","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Keeping good companies","id":"ITEM-2","issue":"April","issued":{"date-parts":[["2010"]]},"page":"136-140","title":"Knowns and unknowns — the challenges for long-term sustainability and responsible investment","type":"article-journal"},"uris":[""]},{"id":"ITEM-3","itemData":{"abstract":"The PRI's Fixed Income Case Study series highlights examples of interesting and innovative approaches to responsible investment. Written by fixed income practitioners from around the world, the case studies cover topics such as integrating ESG, negative and positive screening, thematic investment and engagement. Sharing these examples will enable investors to collectively build a concept of emerging good practice. The PRI aims to publish a set of these short pieces every quarter. If you would like to learn more or contribute your own case study please contact us. NAME KfW ORGANISATION TYPE Development Bank HEADQUARTERS Germany KfW is one of the leading promotional banks in the world – our business activities and social responsibility go hand in hand. Our financing activities support sustainable development in order to improve economic, environmental and social living conditions locally as well as on a global level. We also take on responsibility as an institutional investor, have signed the PRI in 2006 and implemented a sustainable investment approach. By issuing and investing in green bonds we aim to develop this new market segment in order to increase the capital market activities with regard to environmental and climate protection. 2 WHY GREEN BONDS? Investing in green bonds allows fixed income investors to support efforts to mitigate climate change while maintaining returns. We have committed to support a transition to a low carbon economy by financing projects in the field of environmental and climate protection. We also see increasing investor awareness of more sustainable behaviour and are looking to meet increasing demand for sustainable investment products.","author":[{"dropping-particle":"","family":"Sloggett","given":"Justin","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-3","issued":{"date-parts":[["2016"]]},"number-of-pages":"116","title":"A practical guide to ESG integration for equity investing","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Friede et al., 2015; Mccluskey, 2010; Sloggett, 2016)","plainTextFormattedCitation":"(Friede et al., 2015; Mccluskey, 2010; Sloggett, 2016)","previouslyFormattedCitation":"(Friede et al., 2015; Mccluskey, 2010; Sloggett, 2016)"},"properties":{"noteIndex":0},"schema":""}(Friede et al., 2015; Mccluskey, 2010; Sloggett, 2016). Conversely, while standalone ESG research houses are well versed in ESG performance, they can be made up of personnel that lack investment experience, a situation that can lead to the production of research that is disconnected from standard investment practices ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Mccluskey","given":"Amanda","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Keeping good companies","id":"ITEM-1","issue":"April","issued":{"date-parts":[["2010"]]},"page":"136-140","title":"Knowns and unknowns — the challenges for long-term sustainability and responsible investment","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Mccluskey, 2010)","plainTextFormattedCitation":"(Mccluskey, 2010)","previouslyFormattedCitation":"(Mccluskey, 2010)"},"properties":{"noteIndex":0},"schema":""}(Mccluskey, 2010). Furthermore, investors are a heterogenous group, with different objectives, approaches and preferences, who are serving a heterogenous group of clients with a range of objectives and personal values ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1016/j.jclepro.2017.06.143","ISBN":"9781450344869","ISSN":"09596526","PMID":"12194394","abstract":"The integration of environmental, social and governance (ESG) criteria into the evaluation process of assets is a theme that is widely accepted among socially responsible investors. In this process, however, the integration of investors' preferences has not been adequately developed. The challenge is to integrate the preferences of heterogeneous investors—not only conventional investors but also investors who are particularly sensitive to sustainability issues (socially responsible investors)—considering that socially responsible investors are not necessarily homogeneous. This paper attempts to address this challenge by developing a methodological approach based on an application of fuzzy multicriteria decision-making methods (MCDM) to integrate ESG investors' preferences, as jointly considered. Because investors' preferences may vary depending on which material aspects are considered within a sector, this study has been tested using clothing-sector data. Results confirm the usefulness of the methodological approach proposed for a proper generation of a ‘commercial solution' that integrates the preferences of various investors and simultaneously is consistent with individually defined preferences.","author":[{"dropping-particle":"","family":"Escrig-Olmedo","given":"Elena","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Rivera-Lirio","given":"Juana María","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Mu?oz-Torres","given":"María Jesús","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Fernández-Izquierdo","given":"María ?ngeles","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Cleaner Production","id":"ITEM-1","issued":{"date-parts":[["2017"]]},"page":"1334-1345","title":"Integrating multiple ESG investors' preferences into sustainable investment: A fuzzy multicriteria methodological approach","type":"article-journal","volume":"162"},"uris":[""]},{"id":"ITEM-2","itemData":{"DOI":"10.1007/s10551-010-0633-8","ISSN":"01674544","abstract":"The link between Corporate Social Responsibility (CSR) and financial performance has continued to generate mixed and inconclusive results. Most studies in this area seem to assume that corporate social and financial performance share the same under- pinning logic. Drawing from a qualitative analysis of practitioners’ accounts of the challenges of mainstreaming the market for responsible investments, as part of the broader CSR agenda, this article re-examines this taken- for-granted assumption in the extant literature, and reaches the conclusion that CSR, as a complex private governance of externalities, does not easily lend itself to measurability and profitability. In other words, not everything about CSR is measurable and profitable as much as the financial markets would expect. Comparing what is rendered measurable and profitable, on one hand, and what is yet to fully lend itself to measurability and profitability, on the other, is identified as one of the fundamental flaws of this literature. As such, CSR and financial performance will continue to run on competing logics until their different markets are distinctively artic- ulated and/or aligned.","author":[{"dropping-particle":"","family":"Amaeshi","given":"Kenneth","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Business Ethics","id":"ITEM-2","issue":"SUPPL 1","issued":{"date-parts":[["2010"]]},"page":"41-56","title":"Different markets for different folks: Exploring the challenges of mainstreaming responsible investment practices","type":"article-journal","volume":"92"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amaeshi, 2010; Escrig-Olmedo, Rivera-Lirio, Mu?oz-Torres, & Fernández-Izquierdo, 2017)","plainTextFormattedCitation":"(Amaeshi, 2010; Escrig-Olmedo, Rivera-Lirio, Mu?oz-Torres, & Fernández-Izquierdo, 2017)","previouslyFormattedCitation":"(Amaeshi, 2010; Escrig-Olmedo, Rivera-Lirio, Mu?oz-Torres, & Fernández-Izquierdo, 2017)"},"properties":{"noteIndex":0},"schema":""}(Amaeshi, 2010; Escrig-Olmedo, Rivera-Lirio, Mu?oz-Torres, & Fernández-Izquierdo, 2017). Many pieces of literature point out the incompatibility of the finance sector’s short-term mindset and the long-term nature of ESG initiatives ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"The United Nations Environment Programme Finance Initiative (UNEP FI) is a strategic public-private partnership between UNEP and the global financial services sector. UNEP FI works with over 175 financial institutions that are signatories to the UNEP FI Statements, and a range of partner organisations, to develop and promote linkages between the environment, sustainability and financial performance. Through a comprehensive work programme, regional activities, training and research, UNEP FI carries out its mission to identify, promote and realise the adoption of best environmental and sustainability practice at all levels of financial institution operations. The UNEP FI Asset Management Working Group is a global platform of asset managers that collaborate to understand the ways environmental, social and governance factors can affect investment value, and the evolving techniques for their integration into investment anaylsis and decision-making. Mercer's Investment Consulting business Mercer is a leading global provider of investment consulting services, and offers customized guidance at every stage of the investment decision, risk management and investment monitoring process. We have been dedicated to meeting the needs of clients for more than 30 years, and we work with the fiduciaries of pension funds, foundations, endowments and other investors in some 35 countries. We assist with every aspect of institutional investing (and retail portfolios in some geographies), from strategy, structure and implementation to ongoing portfolio management. We create value through our commitment to thought leadership; world-class, independent research; and top-notch consultants with local expertise.","author":[{"dropping-particle":"","family":"UNEP Financial Initiative","given":"","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Mercer","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2007"]]},"page":"82","title":"Demystifying Responsible Investment Performance: A Review of Key Investment Performance","type":"article-journal"},"uris":[""]},{"id":"ITEM-2","itemData":{"DOI":"10.1007/s10551-010-0633-8","ISSN":"01674544","abstract":"The link between Corporate Social Responsibility (CSR) and financial performance has continued to generate mixed and inconclusive results. Most studies in this area seem to assume that corporate social and financial performance share the same under- pinning logic. Drawing from a qualitative analysis of practitioners’ accounts of the challenges of mainstreaming the market for responsible investments, as part of the broader CSR agenda, this article re-examines this taken- for-granted assumption in the extant literature, and reaches the conclusion that CSR, as a complex private governance of externalities, does not easily lend itself to measurability and profitability. In other words, not everything about CSR is measurable and profitable as much as the financial markets would expect. Comparing what is rendered measurable and profitable, on one hand, and what is yet to fully lend itself to measurability and profitability, on the other, is identified as one of the fundamental flaws of this literature. As such, CSR and financial performance will continue to run on competing logics until their different markets are distinctively artic- ulated and/or aligned.","author":[{"dropping-particle":"","family":"Amaeshi","given":"Kenneth","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Business Ethics","id":"ITEM-2","issue":"SUPPL 1","issued":{"date-parts":[["2010"]]},"page":"41-56","title":"Different markets for different folks: Exploring the challenges of mainstreaming responsible investment practices","type":"article-journal","volume":"92"},"uris":[""]},{"id":"ITEM-3","itemData":{"DOI":"10.2139/ssrn.2221455","abstract":"The start of the 2000s saw a flurry of international publications on “the business case” for sustainability, seeking to map out the returns on investment and to differentiate recommended actions from cases of corporate philanthropy. Reports by business organisations and others identified different categories of justifications, incentives, benefits and levels of making the business case. 1) Research over the last decade has pointed to a complex relation between sustainability and financial performance. 2) Results have been influenced by different input and output variables applied, by what is defined as: “sustainability” or “socially responsible” actions, the scope of the agenda covered and the definition of what is the ultimate goal (e.g. increased profit, shareholder value or longer term success and value of the business).","author":[{"dropping-particle":"","family":"Bertoneche","given":"Marc","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Lugt","given":"Cornis","non-dropping-particle":"van der","parse-names":false,"suffix":""}],"container-title":"Ssrn","id":"ITEM-3","issued":{"date-parts":[["2013"]]},"title":"Finding the God Particle of the Sustainability Business Case: Greener Pastures for Shareholder Value","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amaeshi, 2010; Bertoneche & van der Lugt, 2013; UNEP Financial Initiative & Mercer, 2007)","plainTextFormattedCitation":"(Amaeshi, 2010; Bertoneche & van der Lugt, 2013; UNEP Financial Initiative & Mercer, 2007)","previouslyFormattedCitation":"(Amaeshi, 2010; Bertoneche & van der Lugt, 2013; UNEP Financial Initiative & Mercer, 2007)"},"properties":{"noteIndex":0},"schema":""}(Amaeshi, 2010; Bertoneche & van der Lugt, 2013; UNEP Financial Initiative & Mercer, 2007). The finance sector’s demand for quarterly results can clash with the timeframe and payback period (amount of time required to recoup investment costs) of ESG investments ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2139/ssrn.2221455","abstract":"The start of the 2000s saw a flurry of international publications on “the business case” for sustainability, seeking to map out the returns on investment and to differentiate recommended actions from cases of corporate philanthropy. Reports by business organisations and others identified different categories of justifications, incentives, benefits and levels of making the business case. 1) Research over the last decade has pointed to a complex relation between sustainability and financial performance. 2) Results have been influenced by different input and output variables applied, by what is defined as: “sustainability” or “socially responsible” actions, the scope of the agenda covered and the definition of what is the ultimate goal (e.g. increased profit, shareholder value or longer term success and value of the business).","author":[{"dropping-particle":"","family":"Bertoneche","given":"Marc","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Lugt","given":"Cornis","non-dropping-particle":"van der","parse-names":false,"suffix":""}],"container-title":"Ssrn","id":"ITEM-1","issued":{"date-parts":[["2013"]]},"title":"Finding the God Particle of the Sustainability Business Case: Greener Pastures for Shareholder Value","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bertoneche & van der Lugt, 2013)","plainTextFormattedCitation":"(Bertoneche & van der Lugt, 2013)","previouslyFormattedCitation":"(Bertoneche & van der Lugt, 2013)"},"properties":{"noteIndex":0},"schema":""}(Bertoneche & van der Lugt, 2013). This is especially highlighted with certain ESG initiatives that have a longer time lag between implementation and financial impact ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1016/j.jclepro.2014.02.001","ISBN":"0959-6526","ISSN":"09596526","PMID":"21302327","abstract":"The relationship between environmental management practices (EMPs) and company performance has recently been debated in literature and is of interest for both industrial managers and political decision-makers. This paper investigates the relationship between EMPs and firm performance in manufacturing companies in Sweden, China and India. With the content analysis of Global Reporting Initiative (GRI) reports and financial reports of sample companies, the levels of EMPs and the companies' financial performances were coded. Further statistical assessment was conducted in order to identify patterns and correlations. The results indicate that only selected EMPs have been employed differently in three different countries. Most EMPs clearly do not have a positive correlation with the financial performance; i.e. employing EMPs does not necessarily improve the economic consequence of companies. Nevertheless, a number of EMPs do have a strong correlation with improving innovation performance in various companies. It is also interesting to note that a negative correlation exists between the Environmental standard for suppliers and Sales growth. This is possibly due to increasing operational costs and a delay in market acceptance. This research illustrates the possibility of using standard environmental data from GRI reports as a resource for future studies of EMPs. In order to improve long-term financial performance, this study also suggests that innovation should gain a substantial amount of attention when EMPs are employed.","author":[{"dropping-particle":"","family":"Chen","given":"Lujie","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Tang","given":"Ou","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Feldmann","given":"Andreas","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Cleaner Production","id":"ITEM-1","issued":{"date-parts":[["2015"]]},"page":"36-46","publisher":"Elsevier Ltd","title":"Applying GRI reports for the investigation of environmental management practices and company performance in Sweden, China and India","type":"article-journal","volume":"98"},"uris":[""]}],"mendeley":{"formattedCitation":"(Chen et al., 2015)","plainTextFormattedCitation":"(Chen et al., 2015)","previouslyFormattedCitation":"(Chen et al., 2015)"},"properties":{"noteIndex":0},"schema":""}(Chen et al., 2015). Amaeshi takes a strong position on the topic of incompatibility, arguing that there is an inherent conflict between the CSR market’s governance logic and the profit maximization logic of the financial market, and therefore there needs to be a paradigm shift in the financial system before ESG performance can be holistically incorporated ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1007/s10551-010-0633-8","ISSN":"01674544","abstract":"The link between Corporate Social Responsibility (CSR) and financial performance has continued to generate mixed and inconclusive results. Most studies in this area seem to assume that corporate social and financial performance share the same under- pinning logic. Drawing from a qualitative analysis of practitioners’ accounts of the challenges of mainstreaming the market for responsible investments, as part of the broader CSR agenda, this article re-examines this taken- for-granted assumption in the extant literature, and reaches the conclusion that CSR, as a complex private governance of externalities, does not easily lend itself to measurability and profitability. In other words, not everything about CSR is measurable and profitable as much as the financial markets would expect. Comparing what is rendered measurable and profitable, on one hand, and what is yet to fully lend itself to measurability and profitability, on the other, is identified as one of the fundamental flaws of this literature. As such, CSR and financial performance will continue to run on competing logics until their different markets are distinctively artic- ulated and/or aligned.","author":[{"dropping-particle":"","family":"Amaeshi","given":"Kenneth","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Business Ethics","id":"ITEM-1","issue":"SUPPL 1","issued":{"date-parts":[["2010"]]},"page":"41-56","title":"Different markets for different folks: Exploring the challenges of mainstreaming responsible investment practices","type":"article-journal","volume":"92"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amaeshi, 2010)","plainTextFormattedCitation":"(Amaeshi, 2010)","previouslyFormattedCitation":"(Amaeshi, 2010)"},"properties":{"noteIndex":0},"schema":""}(Amaeshi, 2010). The criticism from investment practitioners can be that ESG data is not presented in a relevant manner, in that it has not been quantified or monetized ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2139/ssrn.2221455","abstract":"The start of the 2000s saw a flurry of international publications on “the business case” for sustainability, seeking to map out the returns on investment and to differentiate recommended actions from cases of corporate philanthropy. Reports by business organisations and others identified different categories of justifications, incentives, benefits and levels of making the business case. 1) Research over the last decade has pointed to a complex relation between sustainability and financial performance. 2) Results have been influenced by different input and output variables applied, by what is defined as: “sustainability” or “socially responsible” actions, the scope of the agenda covered and the definition of what is the ultimate goal (e.g. increased profit, shareholder value or longer term success and value of the business).","author":[{"dropping-particle":"","family":"Bertoneche","given":"Marc","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Lugt","given":"Cornis","non-dropping-particle":"van der","parse-names":false,"suffix":""}],"container-title":"Ssrn","id":"ITEM-1","issued":{"date-parts":[["2013"]]},"title":"Finding the God Particle of the Sustainability Business Case: Greener Pastures for Shareholder Value","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bertoneche & van der Lugt, 2013)","plainTextFormattedCitation":"(Bertoneche & van der Lugt, 2013)","previouslyFormattedCitation":"(Bertoneche & van der Lugt, 2013)"},"properties":{"noteIndex":0},"schema":""}(Bertoneche & van der Lugt, 2013); however, ESG considerations are full of complex ethical and social issues that are difficult to distil into simple numbers ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1007/s10551-010-0633-8","ISSN":"01674544","abstract":"The link between Corporate Social Responsibility (CSR) and financial performance has continued to generate mixed and inconclusive results. Most studies in this area seem to assume that corporate social and financial performance share the same under- pinning logic. Drawing from a qualitative analysis of practitioners’ accounts of the challenges of mainstreaming the market for responsible investments, as part of the broader CSR agenda, this article re-examines this taken- for-granted assumption in the extant literature, and reaches the conclusion that CSR, as a complex private governance of externalities, does not easily lend itself to measurability and profitability. In other words, not everything about CSR is measurable and profitable as much as the financial markets would expect. Comparing what is rendered measurable and profitable, on one hand, and what is yet to fully lend itself to measurability and profitability, on the other, is identified as one of the fundamental flaws of this literature. As such, CSR and financial performance will continue to run on competing logics until their different markets are distinctively artic- ulated and/or aligned.","author":[{"dropping-particle":"","family":"Amaeshi","given":"Kenneth","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Business Ethics","id":"ITEM-1","issue":"SUPPL 1","issued":{"date-parts":[["2010"]]},"page":"41-56","title":"Different markets for different folks: Exploring the challenges of mainstreaming responsible investment practices","type":"article-journal","volume":"92"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amaeshi, 2010)","plainTextFormattedCitation":"(Amaeshi, 2010)","previouslyFormattedCitation":"(Amaeshi, 2010)"},"properties":{"noteIndex":0},"schema":""}(Amaeshi, 2010). Indeed, not everything that counts can be measured ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1080/20430795.2015.1118917","ISBN":"0769528295","ISSN":"20430809","PMID":"15956742","abstract":"The search for a relation between environmental, social, and governance (ESG) criteria and corporate financial performance (CFP) can be traced back to the beginning of the 1970s. Scholars and investors have published more than 2,000 empirical studies and several review studies on this relation since then. The largest previous review study analyzes just a fraction of existing primary studies, making findings difficult to generalize. Thus, knowledge on the financial effects of ESG criteria remains fragmented. To overcome this shortcoming, this study extracts all provided primary and secondary data of previous academic review studies. Through doing this, the study combines the findings of about 2,200 individual studies. Hence, this study is by far the most exhaustive overview of academic research on this topic and allows for generalizable statements. The results show that the business case for ESG investing is empirically very well-founded. Roughly 90% of studies find a non-negative ESG-CFP relation. More importantly, the large majority of studies reports positive findings. We highlight that the positive ESG impact on CFP appears stable over time. Promising results are obtained when differentiating for portfolio and non-portfolio studies, regions, and young asset classes for ESG investing such as emerging markets, corporate bonds, and green real estate.","author":[{"dropping-particle":"","family":"Friede","given":"Gunnar","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Busch","given":"Timo","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bassen","given":"Alexander","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-1","issue":"4","issued":{"date-parts":[["2015"]]},"page":"210-233","title":"ESG and financial performance: aggregated evidence from more than 2000 empirical studies","type":"article-journal","volume":"5"},"uris":[""]}],"mendeley":{"formattedCitation":"(Friede et al., 2015)","plainTextFormattedCitation":"(Friede et al., 2015)","previouslyFormattedCitation":"(Friede et al., 2015)"},"properties":{"noteIndex":0},"schema":""}(Friede et al., 2015). Motivations for ImplementationWhen sustainable investment challenges are overcome and the strategies are implemented, they not only differ in approach and execution, but also in terms of the motivation behind pursuing each strategy. Although the subsection of investment practitioners addressed by this research all pursue market rate returns, they are a heterogenous group who report to a variety of clients ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1016/j.jclepro.2017.06.143","ISBN":"9781450344869","ISSN":"09596526","PMID":"12194394","abstract":"The integration of environmental, social and governance (ESG) criteria into the evaluation process of assets is a theme that is widely accepted among socially responsible investors. In this process, however, the integration of investors' preferences has not been adequately developed. The challenge is to integrate the preferences of heterogeneous investors—not only conventional investors but also investors who are particularly sensitive to sustainability issues (socially responsible investors)—considering that socially responsible investors are not necessarily homogeneous. This paper attempts to address this challenge by developing a methodological approach based on an application of fuzzy multicriteria decision-making methods (MCDM) to integrate ESG investors' preferences, as jointly considered. Because investors' preferences may vary depending on which material aspects are considered within a sector, this study has been tested using clothing-sector data. Results confirm the usefulness of the methodological approach proposed for a proper generation of a ‘commercial solution' that integrates the preferences of various investors and simultaneously is consistent with individually defined preferences.","author":[{"dropping-particle":"","family":"Escrig-Olmedo","given":"Elena","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Rivera-Lirio","given":"Juana María","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Mu?oz-Torres","given":"María Jesús","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Fernández-Izquierdo","given":"María ?ngeles","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Cleaner Production","id":"ITEM-1","issued":{"date-parts":[["2017"]]},"page":"1334-1345","title":"Integrating multiple ESG investors' preferences into sustainable investment: A fuzzy multicriteria methodological approach","type":"article-journal","volume":"162"},"uris":[""]}],"mendeley":{"formattedCitation":"(Escrig-Olmedo et al., 2017)","plainTextFormattedCitation":"(Escrig-Olmedo et al., 2017)","previouslyFormattedCitation":"(Escrig-Olmedo et al., 2017)"},"properties":{"noteIndex":0},"schema":""}(Escrig-Olmedo et al., 2017), and therefore have different influences affecting their decisions. Generally, there are three main reasons why investment practitioners integrate sustainable investment strategies into their investment processes: to comply with external or internal standards, regulations and norms; to improve the risk/return profile of their investments; and to encourage sustainable development and business practices ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017)","plainTextFormattedCitation":"(CFA, 2017)","previouslyFormattedCitation":"(CFA, 2017)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017). When complying with standards, regulations and norms, investment practitioners’ strategy of choice is primarily negative and positive screening, which allows the efficient alignment of investments with chosen requirements but does not have a strong case for financial out-performance ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2139/ssrn.2925310","abstract":"Using survey data from a sample of senior investment professionals from mainstream (i.e. not SRI funds) investment organizations we provide insights into why and how investors use reported environmental, social and governance (ESG) information. The primary reason survey respondents consider ESG information in investment decisions is because they consider it financially material to investment performance. ESG information is perceived to provide information primarily about risk rather than a company's competitive positioning. There is no one size fits all, with the financial materiality of different ESG issues varying across sectors. Lack of comparability due to the lack of reporting standards is the primary impediment to the use of ESG information. Most frequently, the information is used to screen companies with the most often used method being negative screening. However, negative screening is perceived as the least investment beneficial while full integration into stock valuation and positive screening considered more beneficial. Respondents expect negative screening to be used less in the future, while positive screening and active ownership to be used more.","author":[{"dropping-particle":"","family":"Amel-Zadeh","given":"Amir","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Serafeim","given":"George","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"SSRN Electronic Journal","id":"ITEM-1","issued":{"date-parts":[["2017"]]},"page":"87-104","title":"Why and How Investors Use ESG Information: Evidence from a Global Survey","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amel-Zadeh & Serafeim, 2017)","plainTextFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)","previouslyFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)"},"properties":{"noteIndex":0},"schema":""}(Amel-Zadeh & Serafeim, 2017). According to a survey by the CFA Institute, if investment practitioners seek to enhance financial returns with sustainable strategies then they perceive the most benefit to arise from integrated analysis, otherwise known as full ESG integration ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.2139/ssrn.2925310","abstract":"Using survey data from a sample of senior investment professionals from mainstream (i.e. not SRI funds) investment organizations we provide insights into why and how investors use reported environmental, social and governance (ESG) information. The primary reason survey respondents consider ESG information in investment decisions is because they consider it financially material to investment performance. ESG information is perceived to provide information primarily about risk rather than a company's competitive positioning. There is no one size fits all, with the financial materiality of different ESG issues varying across sectors. Lack of comparability due to the lack of reporting standards is the primary impediment to the use of ESG information. Most frequently, the information is used to screen companies with the most often used method being negative screening. However, negative screening is perceived as the least investment beneficial while full integration into stock valuation and positive screening considered more beneficial. Respondents expect negative screening to be used less in the future, while positive screening and active ownership to be used more.","author":[{"dropping-particle":"","family":"Amel-Zadeh","given":"Amir","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Serafeim","given":"George","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"SSRN Electronic Journal","id":"ITEM-1","issued":{"date-parts":[["2017"]]},"page":"87-104","title":"Why and How Investors Use ESG Information: Evidence from a Global Survey","type":"article-journal"},"uris":[""]}],"mendeley":{"formattedCitation":"(Amel-Zadeh & Serafeim, 2017)","plainTextFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)","previouslyFormattedCitation":"(Amel-Zadeh & Serafeim, 2017)"},"properties":{"noteIndex":0},"schema":""}(Amel-Zadeh & Serafeim, 2017). This is accomplished by using integrated analysis to discover underrepresented risks or hidden opportunities that other investment practitioners have overlooked ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Orsagh","given":"Matt","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Allen","given":"James","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Sloggett","given":"Justin","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Georgieva","given":"Anna","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bartholdy","given":"Sofia","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Douma","given":"Kris","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"177","title":"Guidance and Case Studies for Esg Integration: Equities and Fixed Income","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Orsagh et al., 2018)","plainTextFormattedCitation":"(Orsagh et al., 2018)","previouslyFormattedCitation":"(Orsagh et al., 2018)"},"properties":{"noteIndex":0},"schema":""}(Orsagh et al., 2018). Impact investing, and to a less explicit extent thematic investing strategies, pursue objectives of positive social and environmental impact and therefore can be associated with the motivation of encouraging sustainable development and business practices ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017)","plainTextFormattedCitation":"(CFA, 2017)","previouslyFormattedCitation":"(CFA, 2017)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017). The literature has not provided detailed coverage of the motivations behind each sustainable investment strategy, which may indicate an opportunity for future research.Conceptual Model Conceptual Model Overview In order to understand and categorise sustainable investing strategies, previous literature often uses a sustainable investment spectrum visualisation ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]},{"id":"ITEM-2","itemData":{"URL":"","accessed":{"date-parts":[["2019","6","18"]]},"author":[{"dropping-particle":"","family":"RIAA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-2","issued":{"date-parts":[["2019"]]},"title":"RI Explained - Responsible Investment Association Australasia","type":"webpage"},"uris":[""]},{"id":"ITEM-3","itemData":{"author":[{"dropping-particle":"","family":"Bridges","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-3","issued":{"date-parts":[["2015"]]},"publisher-place":"London","title":"Bridges Spectrum of Capital: How we define the sustainable and impact investment market","type":"report"},"uris":[""]},{"id":"ITEM-4","itemData":{"author":[{"dropping-particle":"","family":"Rockefeller","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-4","issued":{"date-parts":[["2018"]]},"title":"The Rockefeller Foundation Mission-Related Investing","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018)","plainTextFormattedCitation":"(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018)","previouslyFormattedCitation":"(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018)"},"properties":{"noteIndex":0},"schema":""}(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018). While this visualisation may vary, it is largely based around the same components and organised along a linear continuum. It’s objective is to identify the main sustainable investment approaches and to highlight similarities, differences and focus ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"URL":"","accessed":{"date-parts":[["2019","6","18"]]},"author":[{"dropping-particle":"","family":"RIAA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"RI Explained - Responsible Investment Association Australasia","type":"webpage"},"uris":[""]}],"mendeley":{"formattedCitation":"(RIAA, 2019)","plainTextFormattedCitation":"(RIAA, 2019)","previouslyFormattedCitation":"(RIAA, 2019)"},"properties":{"noteIndex":0},"schema":""}(RIAA, 2019). A selection of industry generated sustainable investment spectrum conceptual models can be seen in Appendix C. This established conceptual model includes features of sustainable investment strategies that are related to themes that have been outlined previously, such as types of strategies, financial performance, and objectives/motivations. Figure 3-3 represents this author’s adaptation of the most common features among a selection of sustainable investment spectrum visualisations found in the literature. Figure STYLEREF 1 \s 3 SEQ Figure \* ARABIC \s 1 3: Sustainable investment spectrum conceptual model Source: Adapted from Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018 This research focuses on a sub-segment of the conceptual model that is associated with market-rate returns; however, the entire conceptual model is shown to provide the context that this area of research sits within. In many of the conceptual models in the literature, it is implied that the investment strategies are ordered from least sustainable on the left to most sustainable on the right. The spectrum starts with traditional investing, which does not consider ESG factors, and negative screening, which is considered an unsophisticated sustainable investment strategy and ends with impact investing and philanthropy, which have a strong focus on social and environmental impact. Beyond this, the model depicts different continuums or sustainable investment characteristics that apply to a collection of sustainable investment strategies. The nature of financial returns is a prevalent characteristic to highlight, as it has been proven that the majority of sustainable investment strategies are compatible with market rate returns, with the exception of impact investing targeting concessionary returns and philanthropy ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Bridges","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2015"]]},"publisher-place":"London","title":"Bridges Spectrum of Capital: How we define the sustainable and impact investment market","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bridges, 2015)","plainTextFormattedCitation":"(Bridges, 2015)","previouslyFormattedCitation":"(Bridges, 2015)"},"properties":{"noteIndex":0},"schema":""}(Bridges, 2015). The models also convey each sustainable investment strategy’s treatment of ESG factors. Strategies could focus on mitigating ESG risks, pursuing ESG opportunities, pursuing positive impact and/or actively solving social and environmental issues ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017)","plainTextFormattedCitation":"(CFA, 2017)","previouslyFormattedCitation":"(CFA, 2017)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017). Findings The following section presents the findings from each of the eight case studies selected for this thesis. The findings are structured to facilitate answering RQ1 and RQ2. In addition, the structure is also informed by the conceptual model in Section 3.6 of the literature review. Specifically, the structure is focused around the two key components of (1) the combination of sustainable investment strategies deployed and (2) the objectives behind the strategies chosen. The principle information underpinning the generation of the case studies is composed of the interviews conducted with sustainable investment practitioners as well as document analysis for each of the associated investment firms. Due to the competitive and private nature of the investment firms, the interviews were carried out anonymously at the request of the participants; therefore, citations and references of the interviewee responses and firm documents have been recorded in a way that fulfils this commitment to anonymity. While there were four exploratory interviews conducted early in the research process, this information is not presented here and was instead used to inform the focused interview questions and refine the research questions. Therefore, the interviews and investment firms recorded in this section are titled as Investment Firm 5 to Investment Firm 12. An overview table of the firms and interviewees is located in Appendix B. Investment Firm 5 OverviewTable STYLEREF 1 \s 4 SEQ Table \* ARABIC \s 1 1: Firm 5 overview tableInstitution TypeInterviewee PositionCountryStrategies DeployedObjectivesMemberships,Guidelines & PartnershipsVenture Capital FirmFund ManagerThe NetherlandsNegative screening, thematic investing, impact investingMaximise impact as a primary objective while delivering market rate returns UN Environment, UN SDGs, 20x20 Initiative, AFR100, ISO 14001Investment Firm 5 is located in the Netherlands and is an impact investment venture capital firm which specializes in sustainable agriculture. Within this industry they focus on the subsectors of palm oil, soy, livestock, rubber and plantation forestry ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 5 - Investment Policy","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"number-of-pages":"1-14","title":"Stichting andgreen.fund: General Lending Policy","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 5 - Investment Policy, 2019)","plainTextFormattedCitation":"(Firm 5 - Investment Policy, 2019)","previouslyFormattedCitation":"(Firm 5 - Investment Policy, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 5 - Investment Policy, 2019). The interview questions were delivered in an online video call with one of the partners who acts as a fund manager. This individual holds a senior position that goes beyond fund management and can be considered the head of sustainability activities and strategies (Interviewee 5, online interview, June 8, 2019). They oversee a number of sustainability related responsibilities, including compliance, investor acquisition, investment due diligence, and investment strategy (Interviewee 5, online interview, June 8, 2019).As a market rate return impact investment fund, their mandate is to maximise environmental impact while still delivering competitive returns. Their mission statement is “to prove that financing inclusive, sustainable and deforestation-free commodity production can be commercially viable and replicable, thus strengthening the case for a new rural development paradigm that protects valuable forests and peatlands and promotes high-productivity agriculture” ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 5 - Investment Policy","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"number-of-pages":"1-14","title":"Stichting andgreen.fund: General Lending Policy","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 5 - Investment Policy, 2019)","plainTextFormattedCitation":"(Firm 5 - Investment Policy, 2019)","previouslyFormattedCitation":"(Firm 5 - Investment Policy, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 5 - Investment Policy, 2019). They are a supporter of the goals of the UN Environment and UN SDGs, and they are partners with Initiative 20x20 and AFR100 which are land restoration initiatives that provide investment guidance (Interviewee 5, online interview, June 8, 2019). Currently there are four investment professionals on his team that are dedicated to sustainable investment activities (Interviewee 5, online interview, June 8, 2019). However, the firm has impact considerations at its core, so all the employees are knowledgeable about ESG factors and carry out their responsibilities with the collective mission to maximise impact. Sustainable Investment StrategiesThe firm uses a combination of sustainable investment strategies including negative screening, thematic investing and impact investing (Interviewee 5, online interview, June 8, 2019). These strategies sit within an overarching Environment and Social Management System, based on ISO 14001, and is a circular process consisting of the environmental and social policy, the fund implementation, an annual management review, and continual improvement ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 5 - Environmental & Social Management System","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"Stichting andgreen.fund: Environmental & Social Management System (ESMS)","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 5 - Environmental & Social Management System, 2019)","plainTextFormattedCitation":"(Firm 5 - Environmental & Social Management System, 2019)","previouslyFormattedCitation":"(Firm 5 - Environmental & Social Management System, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 5 - Environmental & Social Management System, 2019). A sustainable investment strategy that consumes a significant amount of time and resources at the beginning of the investment process is the implementation of a series of negative screens. These screens include jurisdiction eligibility criteria, borrower and co-investor compliance, abiding by the fund’s investment guidelines, environmental and social risks/impacts and landscape-level protection opportunities ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 5 - Environmental & Social Management System","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"Stichting andgreen.fund: Environmental & Social Management System (ESMS)","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 5 - Environmental & Social Management System, 2019)","plainTextFormattedCitation":"(Firm 5 - Environmental & Social Management System, 2019)","previouslyFormattedCitation":"(Firm 5 - Environmental & Social Management System, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 5 - Environmental & Social Management System, 2019). Opportunities that pass these screens represent a short list from which deeper due diligence and evaluation can be focused.Thematic investing is fundamental to this firm’s investment strategy. They are focused on sustainable agriculture opportunities that contribute to land restoration and this theme is core to their theory of change (ToC) which revolves around delivering outcomes to support a growing world population while combating climate change ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 5 - Investment Policy","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"number-of-pages":"1-14","title":"Stichting andgreen.fund: General Lending Policy","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 5 - Investment Policy, 2019)","plainTextFormattedCitation":"(Firm 5 - Investment Policy, 2019)","previouslyFormattedCitation":"(Firm 5 - Investment Policy, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 5 - Investment Policy, 2019). There is high conviction within the firm that investing in alignment with this theme will not only achieve positive impact but also capitalise on a trend that will deliver high financial performance (Interviewee 5, online interview, June 8, 2019).Since this firm is committed to positive social and environmental impact, they invest in alignment with the core impact investing tenants of investing with an intention to generate positive impact, ensure that their impact is measurable, and strive for additionality in relation to a business as usual scenario (Interviewee 5, online interview, June 8, 2019). These characteristics are embedded within their commitment to their investors, pre-screening process, and reporting during the management of the investment (Interviewee 5, online interview, June 8, 2019). Investment Strategy ObjectivesThe sustainable investment strategies used all contribute to supporting the primary objective of maximising positive social and environmental impact (Interviewee 5, online interview, June 8, 2019). This does not mean that they sacrifice financial returns, but they set out with the objective of maximising impact and find creative solutions to generate high financial returns within this constraint. 0-635“If we see a high likelihood of significant impact, we can adapt our financing structure so it supports creating that impact.” – Interviewee 50“If we see a high likelihood of significant impact, we can adapt our financing structure so it supports creating that impact.” – Interviewee 5For example, fund managers will adapt the financing structure to realise high impact opportunities. This can be achieved by modifying the structure of how money is made available to an investee (longer terms, provide grace periods) and/or subordinate their investment relative to other investors to attract additional capital (Interviewee 5, online interview, June 8, 2019). While their sustainable investment strategies of negative screening, thematic investing, and impact investing can theoretically achieve other objectives such as values/norms alignment and improved risk/return profile, they are primarily used in a coordinated fashion to maximise impact (Interviewee 5, online interview, June 8, 2019).Plans to Improve Sustainable Investment Practices Since measurable impact is so important to this firm, they are working on improving their techniques for quantifying impact ex-post and linking it to the financial terms (Interviewee 5, online interview, June 8, 2019). This can create an addition level of accountability if financing incentives are connected to the social and environmental outcomes delivered by the investee. Improving attribution is also an area of focus so that they can determine how much impact their financial contribution is responsible for (Interviewee 5, online interview, June 8, 2019). This effort is meant to support back end reporting frameworks such as the UN SDGs so that they can accurately report their impact contribution and mitigate the risk of double counting alongside the other investors who are participating in the deal (Interviewee 5, online interview, June 8, 2019).Investment Firm 6 OverviewTable STYLEREF 1 \s 4 SEQ Table \* ARABIC \s 1 2: Firm 6 overview tableInstitution TypeInterviewee PositionCountryStrategies DeployedObjectivesMemberships,Guidelines & PartnershipsInvestment ManagementPortfolio ManagerCanadaNegative screening, integrated ESG analysis, active ownershipMaximise financial returns while aligning with the values of sustainably oriented clientele ISSInvestment Firm 6 is located in Canada and is a traditional investment management firm that provides financial advisory and wealth management services for its clients. The interview was conducted via an online video call with one of the portfolio managers. This individual divides their time evenly between the responsibilities of client relations and portfolio management (Interviewee 6, online interview, June 13, 2019). The interviewee’s portfolio management responsibilities were the focus of the interview where they incorporate sustainable investment strategies into the investment due diligence process and investment management process (Interviewee 6, online interview, June 13, 2019).The firm has a mandate to maximise returns for its clients and many of their clients are part of an older demographic that has not requested sustainable investment products (Interviewee 6, online interview, June 13, 2019). However, there has been an increase in requests for investment strategies that align with clients’ ethics and values, so the firm is undergoing a transition in its practices to accommodate this trend (Interviewee 6, online interview, June 13, 2019). Generally, the firm takes a sustainable investment approach, although it is not explicitly stated in its mandate. Currently, there are no dedicated sustainable investment staff and no official sustainable investment policy or system (Interviewee 6, online interview, June 13, 2019). Some sustainably oriented data sources are used in the investment process such as ISS, ESG analysis from banks, and sector based ESG reports (Interviewee 6, online interview, June 13, 2019).Sustainable Investment StrategiesThe main sustainable investment strategies used are negative screening, integrated ESG analysis, and active ownership (Interviewee 6, online interview, June 13, 2019). So far, these strategies have been used informally but there have been some steps taken to formalise the integration of ESG considerations into the investment process (Interviewee 6, online interview, June 13, 2019). Negative screening is used if requested by clients who wish to align their portfolio with their values (Interviewee 6, online interview, June 13, 2019). The firm is hesitant to allow screening to eliminate entire sectors or large portions of a portfolio because it can significantly change the risk return profile of a portfolio (Interviewee 6, online interview, June 13, 2019). In order to mitigate the risk of this, screening is conducted on a case by case basis only after a detailed discussion with the client. -2106170081“In many instances, the sustainability case for integrating ESG factors into an investment decision is not necessary because it simply makes good business sense.” – Interviewee 60“In many instances, the sustainability case for integrating ESG factors into an investment decision is not necessary because it simply makes good business sense.” – Interviewee 6Integrated ESG analysis may be the sustainable investment strategy with the longest history at the firm since it was implemented initially as a way to increase returns through making good business decisions (Interviewee 6, online interview, June 13, 2019). Much of the firm’s strategies around ESG integration come in the form of efficiency improvements such as water conservation, energy reduction, or materials efficiency that improves financial performance through cost reductions (Interviewee 6, online interview, June 13, 2019).After investment have been made, active ownership strategies are used to mitigate risk and help improve company performance. The firm uses the services of ISS, a corporate governance and responsible investor service provider, to help make voting decision on ESG issues (Interviewee 6, online interview, June 13, 2019). ISS provides different guidance depending on the objectives and values of the firm. The version of the service that this firm uses is called Sustainability Policy, and is meant for firms that align with the commitments of UN PRI signatories ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 6 - Voting Policy","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"ISS Voting Guidlines","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 6 - Voting Policy, 2019)","plainTextFormattedCitation":"(Firm 6 - Voting Policy, 2019)","previouslyFormattedCitation":"(Firm 6 - Voting Policy, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 6 - Voting Policy, 2019). Engagement with portfolio companies is also carried out in the form of annual discussions with management to encourage them to improve various ESG KPIs (Interviewee 6, online interview, June 13, 2019).Investment Strategy ObjectivesThe investment mandate primarily centres around maximising returns for the clients. As a result, the sustainable investment strategies of integrated ESG analysis and active ownership are mainly used to improve the risk return profile of the portfolio (Interviewee 6, online interview, June 13, 2019). However, since there is a growing demand for portfolios that align with clients’ values, negative screening is becoming a more prominent strategy. While this strategy can be used to improve the financial performance of a portfolio long-term by divesting from potential stranded assets and avoiding companies with reputational risk, it is also simply being used to satisfy customer demand for investments that are more ethical in nature (Interviewee 6, online interview, June 13, 2019). Plans to Improve Sustainable Investment Practices The main area that the firm is planning to improve their sustainable investment practices is its active ownership activities. Specifically, they are working to improve their engagement dialogue with portfolio companies to encourage them to increase their ESG efforts (Interviewee 6, online interview, June 13, 2019). In the past, ESG topics of conversation have been further down the agenda after more financially centric topics have been discussed. Moving forward, they want to integrate ESG issues into the broader discussion rather than introducing an ESG emissions discussion towards the end of a meeting. They would also like to expand engagement activities to a broader range of industries. Industries perceived as ‘dirty’, such as oil and gas, have been the focus, but they want to expand talks to industries such as real estate and consumer goods in the future (Interviewee 6, online interview, June 13, 2019).Investment Firm 7 OverviewTable STYLEREF 1 \s 4 SEQ Table \* ARABIC \s 1 3: Firm 7 overview tableInstitution TypeInterviewee PositionCountryStrategies DeployedObjectivesMemberships,Guidelines & PartnershipsFamily OfficeDirector of StrategySweden Negative screening, thematic investing, impact investing, active ownershipMaximise impact as a primary objective while delivering market rate returnsCertified B Corporation, GIIN,Investment Firm 7 is located in Sweden and is categorised as a family office. The interview was conducted over a phone call with the director of strategy. This individual oversees the strategic planning and implementation of how the organisation invests (Interviewee 7, phone interview, June 14, 2019). Their responsibilities include sustainable investment strategy, investment due diligence, and working with portfolio companies to achieve impact goals (Interviewee 6, online interview, June 13, 2019).Since they are a family office that derives its funds from a small group of individuals who are committed to positive social and environmental impact, they are able to follow an investment mandate that allows them to prioritize impact. The vision that they strive to realize with their fund is “an inclusive society that encourages and supports human flourishing while living in harmony with the natural world” ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 7 - Investment Guidelines","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"7","title":"Investment Guidelines","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 7 - Investment Guidelines, 2018)","plainTextFormattedCitation":"(Firm 7 - Investment Guidelines, 2018)","previouslyFormattedCitation":"(Firm 7 - Investment Guidelines, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 7 - Investment Guidelines, 2018). The family office is comprised of a staff of 20, and there are no specific individuals responsible for sustainable operations. An impact mission is built into the DNA of the organisation which means that achieving positive social and environmental impact is the primary goal of the organisation’s existence. As a result, all employees carry out their responsibilities with the approach of maximising impact within their role (Interviewee 7, phone interview, June 14, 2019). They used a variety of sustainably investment frameworks such as B Corp Certification, as well as sector specific frameworks to guide investment decisions (Interviewee 7, phone interview, June 14, 2019). Sustainable Investment StrategiesThe firm uses a combination of sustainable investment strategies including negative screening, thematic investing, impact investing, and active ownership (Interviewee 7, phone interview, June 14, 2019). They don’t follow the particular funding formula of a traditional venture capitalist in terms of investment timeframe and percentage of ownership stake (Interviewee 7, phone interview, June 14, 2019). They also don’t just follow a single investment assessment process as it can change depending on contextual factors such as the industry and maturity of the company (Interviewee 7, phone interview, June 14, 2019).The due diligence process starts with an initial screening process to find companies with an impact mission that aligns with the firm (Interviewee 7, phone interview, June 14, 2019). The team must be very certain that the opportunity represents a high probability of significant positive social and/or environmental impact (Interviewee 7, phone interview, June 14, 2019). This investment process also involves relationship building with the founder and members of the team being invested in. Their thematic investment approach is connected to their initial impact mission screen. The family office focuses on the themes of regenerative agriculture, finance, energy, the built environment, and the circular economy because they believe that these subsectors present opportunities for significant impact and also successful financial returns (Interviewee 7, phone interview, June 14, 2019).Since positive impact is a priority for the organisation, they employ the approaches of impact investing such as intentionality, measurability, and additionality. They are rigorous in their accountability of delivering impact with their funds and hold their portfolio companies accountable for creating the impact that they claimed that would produce (Interviewee 7, phone interview, June 14, 2019). In some circumstances, financing terms are connected to impact performance. After funds have been allocated to a company, active ownership is the main tool that is used to ensure that impact and financial goals are achieved. Team members of the family office often sit on the board of their portfolio companies, provide mentoring, and play a strategic role in assisting with business decisions (Interviewee 7, phone interview, June 14, 2019). It is important to them that all parties stay aligned throughout the lifecycle of the investment. Investment Strategy ObjectivesThe sustainable investment strategies used all support the same mission of maximising impact. In fact the interviewee emphasised that they don’t think of the frameworks and strategies they use as separate approaches, they view their investment process as a cohesive strategy with a singular focus ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 7 - Investment Guidelines","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"7","title":"Investment Guidelines","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 7 - Investment Guidelines, 2018)","plainTextFormattedCitation":"(Firm 7 - Investment Guidelines, 2018)","previouslyFormattedCitation":"(Firm 7 - Investment Guidelines, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 7 - Investment Guidelines, 2018).-2106172922“It’s not multiple strategies and multiple motivations, it’s all one discussion around how we can maximise impact”– Interviewee 70“It’s not multiple strategies and multiple motivations, it’s all one discussion around how we can maximise impact”– Interviewee 7This focus on maximising impact doesn’t mean that the organisation doesn’t care about financial performance. They believe that financial success is a key component to the long-term sustainability of the organisation and that it also plays a role in encouraging other investment firms to adopt their impact investment approach (Interviewee 7, phone interview, June 14, 2019). The interviewee framed their relationship to financial returns by stating that “connection to profit is important in the tactical theory of change since we have to catalyse an avalanche of capital into this kind of investing that is aligned with social and environmental needs” (Interviewee 7, phone interview, June 14, 2019). This means that they believe they can play an influential role in showing other investors that this investment approach can deliver high financial performance. Plans to Improve Sustainable Investment Practices The primary plans for improvement are to increase their educational efforts within both their active ownership activities and other engagements (Interviewee 7, phone interview, June 14, 2019). They believe that there is a lack of “philosophically aligned, deeply integrated, healthy business leaders” and that they can play a role in guiding companies towards business models and leadership styles that create significant positive impact while also being financially successful (Interviewee 7, phone interview, June 14, 2019). Their plan is to pursue this through deeper engagement with the management of portfolio companies by being more involved in the operations and company decisions. They also plan to share their experience with an audience beyond their portfolio companies by organising educational sessions and conferences (Interviewee 7, phone interview, June 14, 2019). Investment Firm 8 OverviewTable STYLEREF 1 \s 4 SEQ Table \* ARABIC \s 1 4: Firm 8 overview tableInstitution TypeInterviewee PositionCountryStrategies DeployedObjectivesMemberships,Guidelines & PartnershipsVenture Capital FirmFounding PartnerCanadaNegative screening, thematic investing, impact investing, active ownershipMaximise impact as a primary objective while delivering market rate returnsCertified B Corporation, GIIN, GIIRS, 1% For The Planet, IA 50, Living Wage Employer, OffsettersInvestment Firm 8 is located in Canada and is mission driven venture capital firm. Their firm focuses on early growth stage companies (Interviewee 8, email interview, June 18, 2019). The interview questions were answered via email by the founding partner of the firm. The founding partner is responsible for making final investment decisions with the assistance of the managing partners (Interviewee 8, email interview, June 18, 2019). They were involved in establishing the mission and values of the fund and designing the investment strategies (Interviewee 8, email interview, June 18, 2019).As a mission driven venture capital firm, the team is dedicated to finding opportunities with significant social and/or environmental impact. Financial returns are still important to the firm, as they claim to deliver market returns for their partners, but because they specifically seek partners looking to deploy mission aligned capital, they can follow their investment mandate that prioritises impact (Interviewee 8, email interview, June 18, 2019).Their team is made up of about 15 individuals and there is no head of sustainable investment activities. Everyone at the firm carries out their responsibilities with respect to their mission of maximising impact (Interviewee 8, email interview, June 18, 2019). The investment analysis tools/frameworks that they use include GIIRS and B Corp (Interviewee 8, email interview, June 18, 2019).Sustainable Investment StrategiesThe main sustainable investment strategies that this firm uses to fulfil its investment mandate are negative screening, thematic investing, impact investing, and active ownership (Interviewee 8, email interview, June 18, 2019). 0-635“Mission is our first screen on all potential investments. We will only consider businesses that we believe are designed to have an important environmental or social impact…”– Interviewee 80“Mission is our first screen on all potential investments. We will only consider businesses that we believe are designed to have an important environmental or social impact…”– Interviewee 8The first stage of their investment process involves rigorous screening criteria. The key criteria in this process isolate companies that have a mission to tackle an environmental issue, such as climate change, and have the potential to generate significant impact (Interviewee 8, email interview, June 18, 2019). As part of this process the team reviews the industry as a whole for benchmarking and conducts a lifecycle assessment of the product/service that the company provides (Interviewee 8, email interview, June 18, 2019).The firm uses a thematic approach and specialises in the sectors of organics and environmental tech ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 8 - Investment Philosophy","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"title":"Investment Philosophy","type":"webpage"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 8 - Investment Philosophy, 2018)","plainTextFormattedCitation":"(Firm 8 - Investment Philosophy, 2018)","previouslyFormattedCitation":"(Firm 8 - Investment Philosophy, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 8 - Investment Philosophy, 2018). They find opportunities within these trends that contribute to advancing the sustainability of food, water, and climate ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 8 - Investment Philosophy","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"title":"Investment Philosophy","type":"webpage"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 8 - Investment Philosophy, 2018)","plainTextFormattedCitation":"(Firm 8 - Investment Philosophy, 2018)","previouslyFormattedCitation":"(Firm 8 - Investment Philosophy, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 8 - Investment Philosophy, 2018). The experience they have built in these fields creates a competitive advantage over other firms and allows them to generate above market rate returns by capitalising on trends that have significant long-term potential for impact (Interviewee 8, email interview, June 18, 2019).As a mission driven venture capitalist firm, they incorporate the characteristics of impact investing into their investment process (Interviewee 8, email interview, June 18, 2019). They are intentional about the impact their aim to achieve from the beginning of the investment process, they report on the measurable impact that their portfolio companies generate, and they make sure that their capital is making an additional impact on the outcome of the company (Interviewee 8, email interview, June 18, 2019). After they invest in a company, they work with the team members to stay current with the evolving landscape of the sector, and key issue areas of the company themselves (Interviewee 8, email interview, June 18, 2019). This active ownership in the form of engagement assists companies in delivering the promised impact by sharing domain expertise, their network of relevant relationships, and helping to make strategic decisions (Interviewee 8, email interview, June 18, 2019).Investment Strategy ObjectivesAll of the firm’s sustainable investment strategies work together to achieve their primary objective of maximising impact. The team is focused on supporting companies that are providing solutions that deliver a positive impact, led by entrepreneurs who care passionately about creating change (Interviewee 8, email interview, June 18, 2019). The founding partner stated that their sustainable investment strategies complement each other by “guiding decisions towards a portfolio that is focused on the long-term wellbeing of ecology and society” (Interviewee 8, email interview, June 18, 2019).Plans to Improve Sustainable Investment Practices In the future, the firm aims to apply sustainable investment strategies with more specificity. They want to achieve this by deploying versions of strategies that account for the unique context of each investment (Interviewee 8, email interview, June 18, 2019). While this may take more time than creating a standard investment procedure, they believe that the additional attention to detail will be worth the time because it will lead to greater positive impact (Interviewee 8, email interview, June 18, 2019). They recognise that collaborating more with peers to learn about how they are deploying sustainable investment strategies will be a necessary part of their improvement. Other initiatives that they plan to pursue to improve their practices include hiring more interns, attending educational events, and continuing to learn from their hands-on experience with their portfolio companies (Interviewee 8, email interview, June 18, 2019).Investment Firm 9 OverviewTable STYLEREF 1 \s 4 SEQ Table \* ARABIC \s 1 5: Firm 9 overview tableInstitution TypeInterviewee PositionCountryStrategies DeployedObjectivesMemberships,Guidelines & PartnershipsPension FundProject manager sustainable investmentsSwedenNegative screening, active ownership, thematic investing, legal processesComply with Swedish governmental investment guidelines, align with client values, improve companies’ sustainability practices Abide by the values and??standards expressed in the international conventions that the Swedish government has signed with regard to environment, human rights, labour laws and corruptionInvestment Firm 9 is located in Sweden and is classified as a pension fund. Within this region the pension fund is further categorized as a premium pension fund. The questions were delivered in an online interview with their project manager of sustainable investments. This individual acts as a sustainability analyst and is dedicated to highlighting sustainability issues around any investment activities. They screen portfolio holdings for ESG issues and work with other team members that are dedicated to financial analysis during the investment process (Interviewee 9, online interview, July 17, 2019). The firm’s overall investment stance is that environmental and ethical considerations must be taken into account without sacrificing the goal of high returns ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"AP7's mission is to manage the capital for the savers in premium pension system that has not chosen any of the private funds, so that they receive at least as good a pension as other savers. Guidelines for corporate governance describes how AP7 as a shareholder, within the framework of the assignment, affects the companies to take responsibility for sustainability, ethics and good corporate governance.","author":[{"dropping-particle":"","family":"Firm 9 - Guidelines for Corporate Governance","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"number-of-pages":"6","title":"Guidelines for corporate governance","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 9 - Guidelines for Corporate Governance, 2017)","plainTextFormattedCitation":"(Firm 9 - Guidelines for Corporate Governance, 2017)","previouslyFormattedCitation":"(Firm 9 - Guidelines for Corporate Governance, 2017)"},"properties":{"noteIndex":0},"schema":""}(Firm 9 - Guidelines for Corporate Governance, 2017). Furthermore, the firm has a policy that their management should pursue sustainable development in line with the Brundtland Commission definition of satisfying the current generation’s needs without jeopardizing the opportunity of future generations to satisfy their needs ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"AP7's mission is to manage the capital for the savers in premium pension system that has not chosen any of the private funds, so that they receive at least as good a pension as other savers. Guidelines for corporate governance describes how AP7 as a shareholder, within the framework of the assignment, affects the companies to take responsibility for sustainability, ethics and good corporate governance.","author":[{"dropping-particle":"","family":"Firm 9 - Guidelines for Corporate Governance","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"number-of-pages":"6","title":"Guidelines for corporate governance","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 9 - Guidelines for Corporate Governance, 2017)","plainTextFormattedCitation":"(Firm 9 - Guidelines for Corporate Governance, 2017)","previouslyFormattedCitation":"(Firm 9 - Guidelines for Corporate Governance, 2017)"},"properties":{"noteIndex":0},"schema":""}(Firm 9 - Guidelines for Corporate Governance, 2017). In order to accomplish their investment mandate, there are a number of positions throughout the organisation that contribute to sustainability efforts. The process starts with a top down approach, where the board decides the guidelines for corporate governance ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"AP7's mission is to manage the capital for the savers in premium pension system that has not chosen any of the private funds, so that they receive at least as good a pension as other savers. Guidelines for corporate governance describes how AP7 as a shareholder, within the framework of the assignment, affects the companies to take responsibility for sustainability, ethics and good corporate governance.","author":[{"dropping-particle":"","family":"Firm 9 - Guidelines for Corporate Governance","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"number-of-pages":"6","title":"Guidelines for corporate governance","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 9 - Guidelines for Corporate Governance, 2017)","plainTextFormattedCitation":"(Firm 9 - Guidelines for Corporate Governance, 2017)","previouslyFormattedCitation":"(Firm 9 - Guidelines for Corporate Governance, 2017)"},"properties":{"noteIndex":0},"schema":""}(Firm 9 - Guidelines for Corporate Governance, 2017). Following this, the head of communications and corporate governance is responsible for applying the guidelines in practice and an ESG committee, composed of the CEO, administration manager, and head of communication and ESG, supports implementation. Since much of this pension fund’s investment activity is managed by external managers, the guidelines for corporate governance is a crucial document that dictates not only the mandate of internal fund managers but how external fund managers are chosen. For internal investment activities, there are dedicated team members such as the project manager of sustainable investments that work alongside financial analysist during the investment process (Interviewee 9, online interview, July 17, 2019). ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"2016 is a milestone year in terms of sustainability for AP7. The prelude was COP21 in Paris, where the world’s leaders finally managed to agree on a global climate agreement. With the climate meeting in Copenhagen in our minds, there were probably many who dared not to hope. The moment the agreement was signed we started an intensive internal discussion on the potential effects of the agreement in the next few year. On the 3rd of September 2016, it is announced to the world that both China and the USA have ratified the agreement. The news triggers a chain reaction, with one country after another joining. This results in the agreement entering into force on the 4th of November, less than a year after signing the agreement. Nobody had counted on this extraordinary show of support for the agreement in such a short time, and for us this was a game-changer. The discussion was no longer about what effect the agreement would have after 2020, but rather what would happen next year. We concluded that we were going to step up and participate in the development and implementation of the Paris Agreement. It fits well with our norms-based approach to corporate governance where we, in collaboration with other investors, try to define and implement corporate responsibility standards for the whole market.","author":[{"dropping-particle":"","family":"Firm 9 - Sustainability Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2016"]]},"number-of-pages":"36","title":"Sustainability Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 9 - Sustainability Report, 2016)","plainTextFormattedCitation":"(Firm 9 - Sustainability Report, 2016)","previouslyFormattedCitation":"(Firm 9 - Sustainability Report, 2016)"},"properties":{"noteIndex":0},"schema":""}(Firm 9 - Sustainability Report, 2016) Sustainable Investment StrategiesThere are four main sustainable investment strategies that this pension fund uses to fulfil its investment mandate: negative screening, active ownership, legal processes and thematic investing (Interviewee 9, online interview, July 17, 2019).The firm refers to its negative screening practices as public blacklisting. This process involves a set of criteria that excludes companies from its investible universe. The criteria is based on the requirements of the international conventions that Sweden’s government has chosen to adopt including the Global Compact's ten principles of corporate responsibility for human rights working conditions, environment and anti-corruption ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"2016 is a milestone year in terms of sustainability for AP7. The prelude was COP21 in Paris, where the world’s leaders finally managed to agree on a global climate agreement. With the climate meeting in Copenhagen in our minds, there were probably many who dared not to hope. The moment the agreement was signed we started an intensive internal discussion on the potential effects of the agreement in the next few year. On the 3rd of September 2016, it is announced to the world that both China and the USA have ratified the agreement. The news triggers a chain reaction, with one country after another joining. This results in the agreement entering into force on the 4th of November, less than a year after signing the agreement. Nobody had counted on this extraordinary show of support for the agreement in such a short time, and for us this was a game-changer. The discussion was no longer about what effect the agreement would have after 2020, but rather what would happen next year. We concluded that we were going to step up and participate in the development and implementation of the Paris Agreement. It fits well with our norms-based approach to corporate governance where we, in collaboration with other investors, try to define and implement corporate responsibility standards for the whole market.","author":[{"dropping-particle":"","family":"Firm 9 - Sustainability Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2016"]]},"number-of-pages":"36","title":"Sustainability Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 9 - Sustainability Report, 2016)","plainTextFormattedCitation":"(Firm 9 - Sustainability Report, 2016)","previouslyFormattedCitation":"(Firm 9 - Sustainability Report, 2016)"},"properties":{"noteIndex":0},"schema":""}(Firm 9 - Sustainability Report, 2016). The reason the blacklisting process is labelled as public is because the company name and motives for exclusion are listed in the firm’s annual report, sustainability report and website in the hopes that the negative publicity will encourage a shift in practices (Interviewee 9, online interview, July 17, 2019). Once the investible universe is defined by the public blacklisting, and funds have been allocated, the pension fund turns to active ownership strategies, including both voting and engagement, to influence the practices of portfolio companies. Voting is conducted on the majority of companies under ownership and their voting decisions are based on the OECD principles for corporate governance as well as the fund’s values ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"2016 is a milestone year in terms of sustainability for AP7. The prelude was COP21 in Paris, where the world’s leaders finally managed to agree on a global climate agreement. With the climate meeting in Copenhagen in our minds, there were probably many who dared not to hope. The moment the agreement was signed we started an intensive internal discussion on the potential effects of the agreement in the next few year. On the 3rd of September 2016, it is announced to the world that both China and the USA have ratified the agreement. The news triggers a chain reaction, with one country after another joining. This results in the agreement entering into force on the 4th of November, less than a year after signing the agreement. Nobody had counted on this extraordinary show of support for the agreement in such a short time, and for us this was a game-changer. The discussion was no longer about what effect the agreement would have after 2020, but rather what would happen next year. We concluded that we were going to step up and participate in the development and implementation of the Paris Agreement. It fits well with our norms-based approach to corporate governance where we, in collaboration with other investors, try to define and implement corporate responsibility standards for the whole market.","author":[{"dropping-particle":"","family":"Firm 9 - Sustainability Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2016"]]},"number-of-pages":"36","title":"Sustainability Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 9 - Sustainability Report, 2016)","plainTextFormattedCitation":"(Firm 9 - Sustainability Report, 2016)","previouslyFormattedCitation":"(Firm 9 - Sustainability Report, 2016)"},"properties":{"noteIndex":0},"schema":""}(Firm 9 - Sustainability Report, 2016). Engagement is carried out in the form of influential dialogue with portfolio companies to encourage them to improve their sustainability performance. These conversations can be initiated if there is a standards violation from the blacklisting criteria or as a proactive measure before a major incidence occurs.In extreme circumstances the pension fund may resort to legal proceedings through class action lawsuits when other measures fail. This tactic’s purpose is to compensate shareholders if they have been mistreated and/or to pressure companies to make a change to their sustainability practices (Interviewee 9, online interview, July 17, 2019). It is considered as a last effort before public blacklisting. While not one of the firm’s core sustainable investment strategies, a thematic approach is an emerging strategy that is gaining prominence. This strategy is being deployed in a two-pronged approach. First, every year a new theme is chosen to research in depth. Previous topics have included water conservation, climate and clean technology and the objective is to raise awareness about the issue (Interviewee 9, online interview, July 17, 2019). The second step is the application of the learnings once capacity for internal knowledge has been built. In the case of the water conservation theme, funds were deployed to two external water conservation thematic investment funds, to capitalise on the trend of water scarcity and support companies who are contributing to water conservation technologies and initiatives (Interviewee 9, online interview, July 17, 2019).Investment Strategy ObjectivesThe motivation for this pension fund to pursue sustainable investment strategies is primarily norms and values based. Following this is a desire to promote sustainable development as outlined by their alignment with the Brundtland Commission definition of sustainable development. In order to comply with government regulations and their clients’ values the pension fund has built a sustainable investment strategy with negative screening as its centre piece (Interviewee 9, online interview, July 17, 2019). To further support their primary motivation, the strategies of active ownership and legal process are used to reinforce their norms and values-based criteria throughout the lifecycle of the investment. In parallel to these efforts, some of their sustainable investment strategies support their objective to promote sustainable development. Active ownership, including voting and engagement, is being used to influence the social and environmental impact that companies have within their operations. Furthermore, the pension fund’s foray into thematic investments has an explicit objective of pursuing specific types of sustainable development through a dedicated social or environmental theme. Expressing the firm’s coordinated approach, the interviewee stated that “all our sustainable investment tools work together to drive towards our mission and improve our portfolio companies’ ESG practices” (Interviewee 9, online interview, July 17, 2019).0-635“Environment and ethics must be considered but not at the expense of financial returns.” – Interviewee 90“Environment and ethics must be considered but not at the expense of financial returns.” – Interviewee 9It is clearly stated in their sustainability report that environmental and ethical considerations will not come at the expense of financial returns, which communicates that the firm focuses on investments that fulfil the criteria of producing ethical outcomes and market rate returns ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"2016 is a milestone year in terms of sustainability for AP7. The prelude was COP21 in Paris, where the world’s leaders finally managed to agree on a global climate agreement. With the climate meeting in Copenhagen in our minds, there were probably many who dared not to hope. The moment the agreement was signed we started an intensive internal discussion on the potential effects of the agreement in the next few year. On the 3rd of September 2016, it is announced to the world that both China and the USA have ratified the agreement. The news triggers a chain reaction, with one country after another joining. This results in the agreement entering into force on the 4th of November, less than a year after signing the agreement. Nobody had counted on this extraordinary show of support for the agreement in such a short time, and for us this was a game-changer. The discussion was no longer about what effect the agreement would have after 2020, but rather what would happen next year. We concluded that we were going to step up and participate in the development and implementation of the Paris Agreement. It fits well with our norms-based approach to corporate governance where we, in collaboration with other investors, try to define and implement corporate responsibility standards for the whole market.","author":[{"dropping-particle":"","family":"Firm 9 - Sustainability Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2016"]]},"number-of-pages":"36","title":"Sustainability Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 9 - Sustainability Report, 2016)","plainTextFormattedCitation":"(Firm 9 - Sustainability Report, 2016)","previouslyFormattedCitation":"(Firm 9 - Sustainability Report, 2016)"},"properties":{"noteIndex":0},"schema":""}(Firm 9 - Sustainability Report, 2016). However, there was no financial motivation for pursuing sustainable investment practices stated in their investment guideline documents or during the interview. When questioned about this absence, the interviewee speculated that financial justification is not necessary, due to the social and environmentally minded nature of their stakeholders, so they are free to pursue their norms and values-based investment mandate without explicit connection to financial performance (Interviewee 9, online interview, July 17, 2019).Plans to Improve Sustainable Investment Practices This pension fund’s investment mandate is closely tied to the laws, regulations and norms passed down from the Swedish government (Interviewee 9, online interview, July 17, 2019). Therefore, its future evolution will depend significantly on the direction of Swedish politics; however, there are some key areas that the fund would like to focus on. There is a desire to continue to grow their thematic investment portfolios to integrate more explicit sustainable development objectives into their fund (Interviewee 9, online interview, July 17, 2019). Dedicated thematic investing can deepen the positive social and environmental impact of their collection of portfolios. Any expanded or new strategies will be deployed to support the underlying mission and established sustainability objectives to maintain the current cohesive sustainable investment approach. There is also a recognition that they can’t solve all the sustainable investing issues themselves, so they plan to increase collaboration with other investment professionals. One example of this is open sourced research where instead of confining the findings to firm employees they will share their findings related to sustainability themes with other investment practitioners (Interviewee 9, online interview, July 17, 2019).Investment Firm 10 OverviewTable STYLEREF 1 \s 4 SEQ Table \* ARABIC \s 1 6: Firm 10 overview tableInstitution TypeInterviewee PositionCountryStrategies DeployedObjectivesMemberships,Guidelines & PartnershipsAsset Management FirmESG Investment StrategistUSANegative screening, integrated ESG analysis, active ownershipMaximise financial performance by considering ESG factors, align with client values PRI, SASB, Japan’s Stewardship Code, CERES, CDPInvestment Firm 10 is located in the USA and is an asset management firm. They serve a global client base of institutions, intermediaries, and individuals ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018). The interview questions were delivered via email to an employee with the title of ESG investment strategist. The firm’s overall position on sustainable investing is to generate positive investment outcomes for their clients ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018). This involves a primary focus on maximising financial returns while also accounting for the values of their clients ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018). Over 500 investment professionals contribute to research and investment decisions within the firm ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018). Within their organisation they have a dedicated ESG team which holds the responsibilities of stakeholder management and communication, advising on investment policy and mandate guidelines, generating ESG research, and thought leadership ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018). The firm has developed proprietary ESG tools and services to assist their investment professionals in better understanding ESG risk and expect these individuals to integrate ESG consideration where they believe the ESG issues will affect financial performance (Interviewee 10, email interview, July 23, 2019). Overseeing ESG risk management is the Portfolio Risk Management and Analytics (PRMA) team which is in turn oversee by the Chief Investment Officer ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018).Sustainable Investment StrategiesThe main sustainable investment strategies that this asset management firm uses are negative screening, active ownership, and integrated ESG analysis (Interviewee 10, email interview, July 23, 2019).This firm recognises the importance of providing tailored solutions for their clients. To meet increasing client demand of values aligned portfolios they use a negative screening investment strategy to create portfolio compositions that meet their clients’ ethical needs (Interviewee 10, email interview, July 23, 2019). This process involves a consultation period where each client’s values and financial goals are established ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018).The core sustainable investment strategy that the firm uses is integrated ESG analysis (Interviewee 10, email interview, July 23, 2019). This is executed by injecting material ESG factors into their traditional fundamental analysis to achieve a better perspective of the ESG risks and opportunities that could impact the financial performance of an investment ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018). There are a collection of ex-ante and ex-post tools that use third party ESG data that assist with this integrated ESG analysis (Interviewee 10, email interview, July 23, 2019).They believe that active ownership is an ideal complement to integrated ESG analysis. Active ownership is carried out by both exercising proxy voting on behalf of their clients and engaging with the management of portfolio companies ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018). They engage in this activity to influence company decisions, policies and behaviour in an effort to improve risk adjusted returns ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018).Investment Strategy ObjectivesThe primary objective that this firm has optimised for is to maximise financial performance by factoring ESG risks and opportunities into the investment process. This has been accomplished by using a combination of integrated ESG analysis and active ownership. 0170348“By considering ESG as an important element of investment performance, we are able to consider a broad range of relevant risk factors and generate returns as the market increasingly reacts.”– Firm 10 – ESG Policy & Process0“By considering ESG as an important element of investment performance, we are able to consider a broad range of relevant risk factors and generate returns as the market increasingly reacts.”– Firm 10 – ESG Policy & ProcessThey have recognised the increasing financial need to integrate ESG considerations into their fundamental analysis because of changing consumer preferences, increasing externality costs (i.e. carbon pricing), and the continued introduction of regulations (Interviewee 10, email interview, July 23, 2019). Moreover, ESG analysis is considered good business practices ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018). Active ownership, in the form of company engagement, is also used as a strategy to mitigate the risks within a portfolio company and improve their risk adjusted returns ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 10 - ESG Policy & Process","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"5","title":"ESG Policy and Process","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","plainTextFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)","previouslyFormattedCitation":"(Firm 10 - ESG Policy & Process, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 10 - ESG Policy & Process, 2018). The firm also has a sustainable investment service offering that caters to clientele who have the objective of aligning their portfolio with their values. The primary tool to achieve this objective is to used negative screening to remove certain sectors or companies that don’t meet specific ethical criteria (Interviewee 10, email interview, July 23, 2019).Plans to Improve Sustainable Investment Practices Integrated ESG analysis is a strategic priority for the firm and they intend on committing additional resources to this investment approach (Interviewee 10, email interview, July 23, 2019). This could be carried out by increasing human resource within the ESG centric teams and increasingly focusing on advanced ESG research (Interviewee 10, email interview, July 23, 2019). They recognise the importance of encouraging best practices in this field; therefore, they are developing partnerships with industry associations, disclosure/standards bodies, and non-profits to contribute to future ESG integration approaches and strategies (Interviewee 10, email interview, July 23, 2019).Investment Firm 11 OverviewTable STYLEREF 1 \s 4 SEQ Table \* ARABIC \s 1 7: Firm 11 overview tableInstitution TypeInterviewee PositionCountryStrategies DeployedObjectivesMemberships,Guidelines & PartnershipsWealth Management FirmSustainable Investing StrategistSwitzerlandBest in class, active ownership, thematic, impact investingAlign with client values, maximize financial performanceSupport UN SDGs, aligns with GIIN guidelines, uses guidance from Impact Management ProjectInvestment Firm 11 is located in Switzerland and is classified as a wealth management firm. The questions were delivered via a phone interview with an employee who is a sustainable investing strategist. This role is focused researching and recommending sustainable investment strategies and not portfolio construction itself (Interviewee 11, phone interview, July 31, 2019). The firm takes the position that sustainable investing goals can be achieved while still maximizing financial goals for a given risk level ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 11 - Sustainable Investing Portfolio","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"number-of-pages":"1-17","title":"Sustainable Investing - Portfolio","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)","plainTextFormattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)","previouslyFormattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 11 - Sustainable Investing Portfolio, 2019). Indeed, there is a concerted effort within their sustainable investment materials as well as their client interactions to educate clients about the ways in which these dual objectives can be achieved (Interviewee 11, phone interview, July 31, 2019).There are about 18 employees that are solely dedicated to sustainable investment responsibilities and a number of others who have overlapping responsibilities with sustainable investment activities (Interviewee 11, phone interview, July 31, 2019). The interviewee’s role sits within an independent sustainable investing strategy research unit which is part of the firm’s Chief Investment Office (CIO) (Interviewee 11, phone interview, July 31, 2019). There are a number of team members who work together to develop and construct new investment concepts, including strategists, asset class experts, risk office professionals, and quantitative portfolio construction specialists (Interviewee 11, phone interview, July 31, 2019).Sustainable Investment StrategiesThe sustainable investment strategies deployed by this firm are best in class, thematic investing, active ownership, and impact investing. These strategies are often combined to achieve a client’s needs depending on the outcome of onboarding interviews when a new client is being acquired (Interviewee 11, phone interview, July 31, 2019).The firm’s best in class strategy can be divided into the two sub-strategies of ESG leaders and ESG improvers. The ESG leaders approach selects investment opportunities in companies that are out performing their peers in various environmental, social, and governance issues ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 11 - ESG Leaders Equities","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"August","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-10","title":"Sustainable Investing - ESG Leaders Equities","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 11 - ESG Leaders Equities, 2018)","plainTextFormattedCitation":"(Firm 11 - ESG Leaders Equities, 2018)","previouslyFormattedCitation":"(Firm 11 - ESG Leaders Equities, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 11 - ESG Leaders Equities, 2018). Since there is no universally recognized criteria to benchmark ESG performance the firm assesses the materiality of a collection of ESG measurements and rely on the transparency of ratings agencies and companies to rank the investment opportunity accordingly ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 11 - ESG Leaders Equities","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"August","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-10","title":"Sustainable Investing - ESG Leaders Equities","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 11 - ESG Leaders Equities, 2018)","plainTextFormattedCitation":"(Firm 11 - ESG Leaders Equities, 2018)","previouslyFormattedCitation":"(Firm 11 - ESG Leaders Equities, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 11 - ESG Leaders Equities, 2018). The ESG improvers approach chooses companies that are improving their performance of certain ESG factors faster than their peers ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 11 - ESG Improvers Equities","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"August","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-8","title":"Sustainable Investing - ESG Improvers Equities","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 11 - ESG Improvers Equities, 2018)","plainTextFormattedCitation":"(Firm 11 - ESG Improvers Equities, 2018)","previouslyFormattedCitation":"(Firm 11 - ESG Improvers Equities, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 11 - ESG Improvers Equities, 2018). Quite often these companies are far from ESG leaders but due to their initial low ESG scores and their assessed probability of continuing to improve at a rapid pace, they have high potential to create a positive ESG impact and reap the financial benefits of increasing their ESG performance (Interviewee 11, phone interview, July 31, 2019). There is not consensus on how to determine if a company has a high probability of future improvement but certain indicators can signal improvement such as an upward trend in overall sustainability ratings or the improvement of a leading indicator (implementation of environmental management system) that can lead to future ESG improvements (energy efficiency) which could drive value creation (cost savings) ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 11 - ESG Improvers Equities","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"August","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-8","title":"Sustainable Investing - ESG Improvers Equities","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 11 - ESG Improvers Equities, 2018)","plainTextFormattedCitation":"(Firm 11 - ESG Improvers Equities, 2018)","previouslyFormattedCitation":"(Firm 11 - ESG Improvers Equities, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 11 - ESG Improvers Equities, 2018)ESG thematic equities represents another important sustainable investment strategy for the firm. Quite often this strategy is used in a satellite portfolio to complement a larger core portfolio of a client, so that they can get exposure to a beneficial theme without incurring too much risk (Interviewee 11, phone interview, July 31, 2019). In addition, risk can be further mitigated by investing across many themes and allowing for a longer time period for theme outcomes to develop ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 11 - ESG Thematic Equities","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"August","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-10","title":"Sustainable Investing - ESG Thematic Equities","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 11 - ESG Thematic Equities, 2018)","plainTextFormattedCitation":"(Firm 11 - ESG Thematic Equities, 2018)","previouslyFormattedCitation":"(Firm 11 - ESG Thematic Equities, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 11 - ESG Thematic Equities, 2018). Some of the examples of ESG themes that this firm targets for its clients are climate change, education, healthcare, and gender diversity ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 11 - ESG Thematic Equities","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"August","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-10","title":"Sustainable Investing - ESG Thematic Equities","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 11 - ESG Thematic Equities, 2018)","plainTextFormattedCitation":"(Firm 11 - ESG Thematic Equities, 2018)","previouslyFormattedCitation":"(Firm 11 - ESG Thematic Equities, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 11 - ESG Thematic Equities, 2018). Active ownership, referred to as ESG engagement by this firm, is utilized to achieve incremental improvement in ESG issues by engaging with the management of portfolio companies. This strategy is one of the key ways that this firm supports and pursues the objectives of the UN SDGs ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 11 - ESG Engagement Equities","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issue":"August","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-10","title":"Sustainable Investing - ESG Engagement Equities","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 11 - ESG Engagement Equities, 2018)","plainTextFormattedCitation":"(Firm 11 - ESG Engagement Equities, 2018)","previouslyFormattedCitation":"(Firm 11 - ESG Engagement Equities, 2018)"},"properties":{"noteIndex":0},"schema":""}(Firm 11 - ESG Engagement Equities, 2018). The firm tries to these efforts on small to medium sized companies where their stake in the company represents a larger share of ownership and therefore a more significant voice in calling for change (Interviewee 11, phone interview, July 31, 2019). This firm believes that most sustainable investment strategies are limited in creating intentional and measurable impact; however, ESG engagement can be a way to pursue these two key tenants of impact investing (Interviewee 11, phone interview, July 31, 2019). In this way, their ESG engagement activities allow an opportunity to apply some aspects of impact investing into public equities which are generally very difficult to apply an impact investing strategy. This firm pursues a market rate returns sub-segment of impact investing. This includes the mandatory characteristics of intention to generate positive impact, measurability of key impact metrics, verification that the investment is correlated with the intended impact goals, and additionality in relation to a base case scenario (Interviewee 11, phone interview, July 31, 2019). The impact investing definition followed is informed by the Global Impact Investing Network (GIIN) which provides well recognized guidelines on impact investing. This strategy is often reserved for clients that are the most committed to generating positive impact within their portfolio (Interviewee 11, phone interview, July 31, 2019).Investment Strategy ObjectivesInvestment Firm 11 has been experiencing an increase in demand for sustainable investment products from both institutional and individual investors so they are offering more options to meet a mix of financial and ESG objectives ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 11 - Sustainable Investing Portfolio","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"number-of-pages":"1-17","title":"Sustainable Investing - Portfolio","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)","plainTextFormattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)","previouslyFormattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 11 - Sustainable Investing Portfolio, 2019). Instead of aligning client’s objectives and values with a particular sustainable investment strategy, this firm has created sustainable versions of traditional benchmark portfolios which utilize different sustainable investment strategies (Interviewee 11, phone interview, July 31, 2019). Traditional portfolio construction uses the building blocks of asset class specific portfolios which can be combined together in different proportions to achieve an appropriate risk return profile for a client (Interviewee 11, phone interview, July 31, 2019). By creating equivalent sustainable versions of these building block portfolios, this firm can deliver client’s a variety of risk return profiles while also achieving a third dimension of positive social/environmental impact. -21060“For us, sustainable investing is a tailored approach depending on our client’s needs” – Interviewee 110“For us, sustainable investing is a tailored approach depending on our client’s needs” – Interviewee 11This portfolio construction technique can be illustrated by an example of the ways in which this firm has created an equivalent sustainable investment portfolio building block. To mimic the characteristics of a traditional global equities asset class portfolio the firm created a sustainable portfolio called ESG Thematic Equities ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 11 - Sustainable Investing Portfolio","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"number-of-pages":"1-17","title":"Sustainable Investing - Portfolio","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)","plainTextFormattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)","previouslyFormattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 11 - Sustainable Investing Portfolio, 2019). This portfolio uses a sustainable thematic investment strategy and an appropriate benchmark would be the MSCI World Index which tracks a broad range of global developed market equities ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 11 - Sustainable Investing Portfolio","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"number-of-pages":"1-17","title":"Sustainable Investing - Portfolio","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)","plainTextFormattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)","previouslyFormattedCitation":"(Firm 11 - Sustainable Investing Portfolio, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 11 - Sustainable Investing Portfolio, 2019). Other equity based sustainable investment portfolios that aim to act as equivalent portfolio building blocks include ESG Leaders Equities, ESG Improvers Equities, and ESG Engagement Equities (Interviewee 11, phone interview, July 31, 2019). As their names imply, some of the sustainable investment strategies mentioned previously are at the core of the portfolio’s development. During the interview with the sustainable investing strategist, their expertise was used to assist this author in mapping clients’ objectives to the sustainable investing strategies associated with the building block portfolios. When a client is mostly focused on aligning their portfolio with their values, the strategies indirectly recommended are usually best in class and engagement (Interviewee 11, phone interview, July 31, 2019). If the goal is to maximize positive social and environmental impact then thematic investing and impact investing are most appropriate due to their sophistication in pursuing specific impact metrics (Interviewee 11, phone interview, July 31, 2019). To improve the risk return profile of a portfolio, thematic investing can be used to avoid the potential negative financial impact of trends such as climate change and stranded assets (Interviewee 11, phone interview, July 31, 2019). As a complement to these primary strategies, active ownership can act as a flexible secondary strategy to help support the primary objective (Interviewee 11, phone interview, July 31, 2019). Finally, it was expressed that since these sustainable building block portfolios are almost always combined, this creates scenarios where the associated sustainable investment strategies are combined to achieve a mix of objectives (Interviewee 11, phone interview, July 31, 2019).Plans to Improve Sustainable Investment Practices Plans for improvement primarily come in the form of expansion of sustainable investment strategies to other asset classes. The interviewee expressed that sustainable investment products are still somewhat limited (Interviewee 11, phone interview, July 31, 2019). Currently, they have created seven key sustainable investment asset class portfolio building blocks, which each replace their traditional asset class equivalent, but there are still some asset classes that are not represented (Interviewee 11, phone interview, July 31, 2019). An example of this is the absence of hedge funds in sustainably oriented portfolios because this firm has determined that hedge funds do not display sufficient sustainable investment characteristics (Interviewee 11, phone interview, July 31, 2019). Therefore, the firm sees a need to expand sustainable investment strategies beyond their current focus on equities and find ways of applying the techniques to alternative asset classes. In terms of building upon the sustainable investment strategies that are already in place, the firm would like to grow its engagement activities (Interviewee 11, phone interview, July 31, 2019). They believe there is a lot of opportunity in working with companies to improve their sustainability practices before resorting to divestment. Catalysing company change can be enhanced by further developing internal sustainability expertise so the firm can provide better guidance. Reporting better on impact metrics is another area where improvement is needed at the firm. The interviewee expressed the need for greater accountability of measurable impact of sustainable investment strategies in an effort to mitigate the green/impact washing that is problematic in the industry (Interviewee 11, phone interview, July 31, 2019).Investment Firm 12OverviewTable STYLEREF 1 \s 4 SEQ Table \* ARABIC \s 1 8: Firm 12 overview tableInstitution TypeInterviewee PositionCountryStrategies DeployedObjectivesMemberships,Guidelines & PartnershipsPrivate Investment FirmDirector of Environmental Social Governance USAIntegrated ESG Analysis, Active OwnershipMaximise financial returns while supporting positive social and environmental outcomes Align with UN SDGs, UN PRIInvestment Firm 12 is located in the USA and is classified as a private investment firm. The questions were delivered via email to the director of environmental social governance at the firm. This individual is responsible for developing and amplifying sustainability and social impact efforts across portfolio companies (Interviewee 12, email interview, August 2, 2019).The firm’s stance on sustainable investing is that it can be a central component of maximising financial returns for its clients while also supporting companies that are better global citizens ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 12 - Annual GES Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"2019 Annual GES Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 12 - Annual GES Report, 2019)","plainTextFormattedCitation":"(Firm 12 - Annual GES Report, 2019)","previouslyFormattedCitation":"(Firm 12 - Annual GES Report, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 12 - Annual GES Report, 2019). They explain this as better general results (including financial and non-financial performance) for all stakeholders involved. There is strong consideration of sustainability issues in the due diligence and investment decision process since they recognise that these issues have a material impact on risk, valuation, and profitability ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 12 - Annual GES Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"2019 Annual GES Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 12 - Annual GES Report, 2019)","plainTextFormattedCitation":"(Firm 12 - Annual GES Report, 2019)","previouslyFormattedCitation":"(Firm 12 - Annual GES Report, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 12 - Annual GES Report, 2019). The firm is aligned with the six UN PRI principles and strives to contribute to the goals of the UN SDGs. This individual’s role sits within the firm’s ESG team and they work with both dedicated ESG professionals as well as more traditional financial professionals throughout the strategic and portfolio construction process (Interviewee 12, email interview, August 2, 2019). This team reports to the head of sustainability and ESG who facilitates the integration of ESG research, analysis and personnel throughout the firm’s practices ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 12 - Annual GES Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"2019 Annual GES Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 12 - Annual GES Report, 2019)","plainTextFormattedCitation":"(Firm 12 - Annual GES Report, 2019)","previouslyFormattedCitation":"(Firm 12 - Annual GES Report, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 12 - Annual GES Report, 2019). They have over 140 investment and support staff trained in ESG practices ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 12 - Annual GES Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"2019 Annual GES Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 12 - Annual GES Report, 2019)","plainTextFormattedCitation":"(Firm 12 - Annual GES Report, 2019)","previouslyFormattedCitation":"(Firm 12 - Annual GES Report, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 12 - Annual GES Report, 2019). Output of ESG team members can include ESG goal setting, new product innovation, and corporate social responsibility reporting. Sustainable Investment StrategiesThe main sustainable investment strategy of this firm is integrated ESG analysis. In executing this strategy the ESG team works in conjunction with their field operations team to assess the risks and opportunities of investments ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 12 - Annual GES Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"2019 Annual GES Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 12 - Annual GES Report, 2019)","plainTextFormattedCitation":"(Firm 12 - Annual GES Report, 2019)","previouslyFormattedCitation":"(Firm 12 - Annual GES Report, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 12 - Annual GES Report, 2019). They state that “ESG has become as important as any actively managed component of what we do” ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 12 - Annual GES Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"2019 Annual GES Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 12 - Annual GES Report, 2019)","plainTextFormattedCitation":"(Firm 12 - Annual GES Report, 2019)","previouslyFormattedCitation":"(Firm 12 - Annual GES Report, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 12 - Annual GES Report, 2019). The version of integrated ESG analysis utilised is integration into their fundamental financial analysis. Therefore, ESG factors are used to adjust certain financial performance indicators such as operating margin, cashflow, and revenue growth (Interviewee 12, email interview, August 2, 2019). As a result, their ESG lens provides them with a different outlook on certain investment opportunities relative to their peers and can uncover hidden value that has not been priced into the market. Over the course of the firm’s history their ESG strategy has evolved through three distinct phases. ESG 1.0 focused on risk management, ESG 2.0 focused on cost and risk reduction, and ESG 3.0 now focuses on value creation and positive outcomes ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 12 - Annual GES Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"2019 Annual GES Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 12 - Annual GES Report, 2019)","plainTextFormattedCitation":"(Firm 12 - Annual GES Report, 2019)","previouslyFormattedCitation":"(Firm 12 - Annual GES Report, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 12 - Annual GES Report, 2019). To complement this primary strategy the firm also uses active ownership during the post-investment phase of the investment cycle. This occurs primarily in the form of engagement via an ongoing dialogue company management. The firm actively encourages portfolio companies to establish ESG policies, participate in their Sustainability Leadership Council, complete an ESG performance assessment annually, and measure and report goals and action plans ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 12 - Annual GES Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"2019 Annual GES Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 12 - Annual GES Report, 2019)","plainTextFormattedCitation":"(Firm 12 - Annual GES Report, 2019)","previouslyFormattedCitation":"(Firm 12 - Annual GES Report, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 12 - Annual GES Report, 2019). In return, portfolio companies benefit from this firm’s ESG expertise and guidance as they strive to improve CSR performance. Investment Strategy ObjectivesThe primary objective that this firm strives to achieve is maximising financial returns by leveraging material ESG factors. This is similar to comparable investment firms who seek to use integrated ESG analysis to create a competitive advantage in uncovering investment opportunities. -1333516510“We seek to be opportunistic where ESG initiatives can assist in creating enterprise value”– Firm 12 – Annual GES Report0“We seek to be opportunistic where ESG initiatives can assist in creating enterprise value”– Firm 12 – Annual GES ReportAs a result of their emphasis on maximising financial returns for their clients, conducting a materiality assessment prior to an investment decision is necessary to determine which ESG factors will have the greatest influence on financial performance. They believe that this focus can generate superior financial returns while at the same time producing positive social and environmental impact in the communities they invest in ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 12 - Annual GES Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"2019 Annual GES Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 12 - Annual GES Report, 2019)","plainTextFormattedCitation":"(Firm 12 - Annual GES Report, 2019)","previouslyFormattedCitation":"(Firm 12 - Annual GES Report, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 12 - Annual GES Report, 2019).To support their primary objective and primary sustainability strategy of integrated ESG analysis, they also pursue an active ownership strategy ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 12 - Annual GES Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"2019 Annual GES Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 12 - Annual GES Report, 2019)","plainTextFormattedCitation":"(Firm 12 - Annual GES Report, 2019)","previouslyFormattedCitation":"(Firm 12 - Annual GES Report, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 12 - Annual GES Report, 2019). This allows the firm to continue to influence material ESG issues after an investment has been made; therefore, providing guidance that in theory should contribute to the financial performance of the portfolio company. A co-benefit is that this shareholder pressure can also result in greater transparency, appeasing shareholders that are demanding clearer sustainability reporting. Plans to Improve Sustainable Investment Practices The firm’s improvement activities centre around their integrated ESG analysis and increased collaboration. They would like to find innovative ways to integrate different ESG factors into their fundamental analysis (Interviewee 12, email interview, August 2, 2019). This could involve investment in deeper ESG research, seeking more accurate information, and experimenting with adjusting new financial performance indicators. They also would like to further engage with the sustainable investment community to encourage ESG integration by sharing their expertise and network reach ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Firm 12 - Annual GES Report","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"2019 Annual GES Report","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Firm 12 - Annual GES Report, 2019)","plainTextFormattedCitation":"(Firm 12 - Annual GES Report, 2019)","previouslyFormattedCitation":"(Firm 12 - Annual GES Report, 2019)"},"properties":{"noteIndex":0},"schema":""}(Firm 12 - Annual GES Report, 2019). The hope is to create a learning environment where all firms can elevate their application of sustainable investing. Analysis and DiscussionThe focus of this research was to explore how sustainable investment strategies are combined in practice to achieve investment objectives. Therefore, the discussion in Section 5 synthesises the findings from Section 4 to analyse their significance with respect to this focus. Section 5.1 highlights and analyses key trends associated with the sustainable investment practices encountered in each of the case studies. Section 5.2 and 5.3 then proceeds to answer both research questions and explore the validity of the initial hypotheses. While the research was heavily influenced by a sustainable investment strategy conceptual model that has broad industry consensus ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]},{"id":"ITEM-2","itemData":{"URL":"","accessed":{"date-parts":[["2019","6","18"]]},"author":[{"dropping-particle":"","family":"RIAA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-2","issued":{"date-parts":[["2019"]]},"title":"RI Explained - Responsible Investment Association Australasia","type":"webpage"},"uris":[""]},{"id":"ITEM-3","itemData":{"author":[{"dropping-particle":"","family":"Bridges","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-3","issued":{"date-parts":[["2015"]]},"publisher-place":"London","title":"Bridges Spectrum of Capital: How we define the sustainable and impact investment market","type":"report"},"uris":[""]},{"id":"ITEM-4","itemData":{"author":[{"dropping-particle":"","family":"Rockefeller","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-4","issued":{"date-parts":[["2018"]]},"title":"The Rockefeller Foundation Mission-Related Investing","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018)","plainTextFormattedCitation":"(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018)","previouslyFormattedCitation":"(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018)"},"properties":{"noteIndex":0},"schema":""}(Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018), a critique of the model is included in this section. As there were some inconsistencies found regarding this model’s depiction of sustainable investment strategies relative to their implementation in practice, the content of Section 5.4 challenges the existing conceptual model and proposes an alternative model. Section 5.5 addresses how this new conceptual model and the other research findings could have some implications for the sustainable investment industry. The discussion concludes with Section 5.6 which addresses some important limitations. Analysis of TrendsOver the course of the case study interviews and document analysis there were some key themes that emerged. Table 5-1 below outlines some of the key findings from each of the firms studied. One key trend that stands out is that there were no investment processes examined that only relied on one sustainable investment strategy – rather, each firm used a combination of strategies. In fact, the minimum number of strategies deployed by any one firm was three. As a result, firms were not easily defined by a single sustainable investment strategy, and therefore did not fit clearly into any of the categories outlined in the literature’s existing conceptual model shown in Figure 3-3 on page 31. Active ownership was a dominant sustainable investment strategy. Only one firm did not explicitly state that they use this strategy to support their investment objectives. Since this is the main strategy that can be used post-investment decision, this finding appears to indicate that firms are looking for ways to pursue their sustainable investment objectives not only during the pre-investment due diligence but throughout the investment lifecycle. Some existing literature describes regionally oriented sustainable investment themes that can occur, such as a focus on certain types of strategies ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1080/20430795.2016.1176425","ISSN":"20430809","PMID":"19717154","abstract":"True ESG integration means ESG factors are systematically fed into the valuation models and investment decisions of analysts and PMs. However, most ESG approaches fail to do this. As a result, sustainable investing is much less an application success than a marketing success. Our Value Driver Adjustment (VDA) approach is different: it ties into traditional valuation approaches by linking ESG issues to value drivers via their impact on business models and competitive positions. For equities, the initial results find that the average target price impact of ESG factors is 5% overall, and 10% conditional on non-zero adjustments; dispersion is wide as target price changes ranged from -23% to 71%. The investment team has experienced a pay-off in terms of more in-depth analysis of companies, a clearer view on risk and better informed decisions.","author":[{"dropping-particle":"","family":"Schramade","given":"Willem","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Journal of Sustainable Finance and Investment","id":"ITEM-1","issue":"2","issued":{"date-parts":[["2016"]]},"page":"95-111","publisher":"Taylor & Francis","title":"Integrating ESG into valuation models and investment decisions: the value-driver adjustment approach","type":"article-journal","volume":"6"},"uris":[""]},{"id":"ITEM-2","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-2","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017; Schramade, 2016)","plainTextFormattedCitation":"(CFA, 2017; Schramade, 2016)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017; Schramade, 2016); however, no conclusion can be drawn as the sample size was quite small. Certain affiliations were more common than others since there was a number of firms that aligned with the UN SDGs, PRI, and GIIN. However, there were no correlations between certain types of memberships, guidelines and partnerships and the choice of sustainable investment strategies. In terms of a relationship with objectives, two out of three of the firms whose goal is to maximise impact require their portfolio companies to be Certified B Corporations.Table STYLEREF 1 \s 5 SEQ Table \* ARABIC \s 1 1: Summary of case study findingsInstitution TypeInterviewee PositionCountryStrategies DeployedObjectivesMemberships,Guidelines & PartnershipsVenture Capital Firm (Firm 5)Fund ManagerThe NetherlandsNegative screening, thematic investing, impact investingMaximise impact as a primary objective while delivering market rate returns UN Environment, UN SDGs, 20x20 Initiative, AFR100, ISO 14001Investment Management(Firm 6)Portfolio ManagerCanadaNegative screening, integrated ESG analysis, active ownershipMaximise financial returns while aligning with the values of sustainably oriented clientele ISSFamily Office (Firm 7)Director of StrategySweden Negative screening, thematic investing, impact investing, active ownershipMaximise impact as a primary objective while delivering market rate returnsCertified B Corporation, GIIN,Venture Capital Firm (Firm 8)Founding PartnerCanadaNegative screening, thematic investing, impact investing, active ownershipMaximise impact as a primary objective while delivering market rate returnsCertified B Corporation, GIIN, GIIRS, 1% For The Planet, IA 50, Living Wage Employer, OffsettersPension Fund (Firm 9)Project manager sustainable investmentsSwedenNegative screening, active ownership, thematic investing, legal processesComply with government regulations, align with client values, improve companies’ sustainability practices Abide by the values and??standards expressed in the international conventions that the Swedish government has signed with regard to environment, human rights, labour laws and corruptionAsset Management Firm (Firm 10)ESG Investment StrategistUSANegative screening, integrated ESG analysis, active ownershipMaximise financial performance by considering ESG factors, align with client values PRI, SASB, Japan’s Stewardship Code, CERES, CDPWealth Management Firm(Firm 11)Sustainable Investing StrategistSwitzerlandBest in class, active ownership, thematic, impact investingAlign with client values, maximize financial performanceSupport UN SDGs, aligns with GIIN guidelines, uses guidance from Impact Management ProjectPrivate Investment Firm(Firm 12)Director of Environmental Social Governance USAIntegrated ESG Analysis, Active OwnershipMaximise financial returns while supporting positive social and environmental outcomes Align with UN SDGs, UN PRISince this research is focused on the combination of sustainable investment strategies and their associated objectives it was important to highlight some of the related trends. Table 5-2 groups firms based on their primary objective (maximise impact, improve risk/return profile, and values/norms alignment) and some clear patterns emerge. The firms that aim to maximise impact all chose to use impact investing and thematic investing as their primary strategies. As secondary support strategies they all use negative screening and all but one firm uses active ownership as well. In terms of firms who focus on improving the risk/return profile of their portfolio, it is observed that all use integrated ESG analysis as their primary strategy. Secondary strategies deployed were usually negative screening and active ownership. It should be noted that strategies such as negative screening can be used for different purposes; however, the firms communicated that they used it in this context as a way to remove companies that had a high risk of negatively affecting a portfolio’s financial performance. This could include removing companies that have a high risk of being stranded assets or incurring incident related fines.Firm 9 was the only firm studied that only pursues the objective of values/norms alignment. However, Firm 11 optimises portfolios based on any of the main investment objectives outlined, depending on their client’s needs. Essentially, Firm 11 offers three different approaches within its offerings that are tailored to a particular objective. Considering this, Firm 9’s approach to values/norms alignment is quite similar to the equivalent approach within Firm 11. While firm 11 uses best-in-class as the primary strategy, instead of negative screening, they use best-in-class in a way that has commonalities with negative screening. They accomplish this by creating their best-in-class criteria based on their client’s values, achieving a similar outcome as a values based negative screening strategy would produce. The other sustainable investment strategy approaches related to Firm 11 have much overlap with the trends seen in the other firms. Table STYLEREF 1 \s 5 SEQ Table \* ARABIC \s 1 2: Mapping firms’ primary objective to primary and secondary sustainable investment strategiesFirm #Primary Objective Primary StrategiesSecondary Strategies Firm 5Maximise impactImpact investing, thematic investingNegative screeningFirm 7Maximise impactImpact investing, thematic investingNegative screening, active ownershipFirm 8Maximise impactImpact investing,Thematic investingNegative screening, active ownership Firm 6Improve risk/return profileIntegrated ESG analysisNegative screening, active ownershipFirm 10Improve risk/return profileIntegrated ESG analysisNegative screening, active ownershipFirm 12Improve risk/return profileIntegrated ESG analysisActive ownershipFirm 9Values / norms alignmentNegative screeningActive ownership, thematic investing, legal processesFirm 11*Values / norms alignmentMaximise impactImprove risk/return profileBest-in-classImpact investing, thematic investing Thematic investingActive ownershipActive ownershipActive ownership*Different client objectives receive tailored treatment that can generally fall into the three scenarios outlinedAnother area where trends emerged were the areas of sustainable investment practices that firms intended to improve in the future. Table 5-3 summarises the main areas where each firm plans to focus. Much of the focus for improvement centres around post-investment activities or indirectly related investment process activities. A key theme that arose regarding post-investment activities is the motivation to improve and expand active ownership initiatives. While some firms put more emphasis on engagement over exercising voting rights, there was a clear desire among many firms to increase their presence in influencing portfolio companies with regards to social and environmental issues. Another post-investment improvement initiative that held importance was to develop better impact measurement and reporting. With regards to indirectly related investment process activities, half the firms reported wanting to increase their collaborative efforts with other stakeholders, including industry associations, investment peers, and NGOs. It appears that investment firms are willing to collaborate and gain the benefits of cost sharing if competitive advantage is not an issue. As these firms strive to improve, it is clear that they hope to learn from each other as sustainable investing develops. Table STYLEREF 1 \s 5 SEQ Table \* ARABIC \s 1 3: Aggregated summary of investment firm’s future improvement focusFirm # Future Improvement FocusFirm 5Improve impact measurement + reportingFirm 6Improve and expand active ownership initiatives Firm 7Improve and expand active ownership initiatives Collaborate with other stakeholdersFirm 8More customised sustainable investment strategy deploymentCollaborate with other stakeholdersFirm 9Expand thematic portfolio offeringsCollaborate with other stakeholdersFirm 10Improve integrated ESG analysisCollaborate with other stakeholdersFirm 11Expand sustainable investment strategies into other asset classesExpand engagement activities Improve impact measurement + reportingFirm 12Improve integrated ESG analysisCollaborate with other stakeholdersAddressing RQ1The focus of RQ1 was to prompt the exploration of the nuances of sustainable investment strategy implementation in practice. Specifically, the research examined the ways in which multiple sustainable investment strategies can be combined within an investment process. Furthermore, information was gathered regarding why sustainable investment strategies are combined at all.RQ1: How do market rate return equity investment practitioners combine sustainable investment strategies within their investment process? H1: Many investors don’t use a single sustainable investment strategy and are not easily defined by one subcategory of the sustainable investment spectrum. Instead, they combine multiple strategies to meet mixed objectives. RQ1 has an implied assumption that sustainable investment strategies are combined instead of used independently. This assumption was explicitly stated as a hypothesis (H1) that needed to be tested. After document analysis and interviews were conducted for each of the case studies selected, it was determined that the investors and investment firms engaged with indeed combine multiple strategies within their investment process. This is shown in Table 5-1 and further emphasised in Table 5-2. Since all firms selected for this research have the investment objective to achieve market rate returns this is considered an assumed and common objective. Outside of this objective there were three categories of objectives that were pursued using sustainable investment strategies: achieving values/norms alignment, improving the risk/return profile, and maximising social/environmental impact. While H1 assumed that multiple strategies would be combined to meet mixed objectives, this wasn’t always the case. For example, Firm 9 uses multiple strategies but combines these complementary strategies to pursue the single objective of aligning portfolios with their clients’ values, regulations, and norms. How sustainable investment strategies are combined can be further understood by reflecting on the conversations with investment practitioners about why they are combined. There was a common theme among responses regarding the co-benefits of multiple strategies, since every strategy has strengths and weaknesses. Among investment practitioners that were optimising for social and environmental impact, negative screening, thematic investing, and impact investing were often combined together. While negative screening is a relatively unsophisticated tool in making binary investment universe decisions, it does provide an effective means of enforcing a firm’s mandate to eliminate non-impact mission aligned firms at the beginning of the investment decision process. The resulting investment universe can then be further focused by using another strategy such as thematic investing to isolate the companies that fit a firm’s theory of change by addressing a particular theme. Different sustainable investment strategies can also complement each other by supporting a common objective at various stages of the investment process. When the objective is to align the portfolio with a client’s values/norms, a best-in-class approach can be used during the investment decision and active ownerships can be used post-investment to engage with management regarding ethical issues. Addressing RQ2The focus of RQ2 was to determine how investment practitioners plan to improve their sustainable investment practices in the future. This was meant to explore the evolution of sustainable investment strategy implementation.RQ2: How do market rate return equity investment practitioners plan to improve their sustainable investment practices? H2: Investment practitioners will increasingly use a collection of sustainable investment strategies to optimise security selection and achieve financial and non-financial objectives. The initial hypothesis was that plans for improvement would focus on increasingly combining more sustainable investment strategies to create more sophisticated sustainable investment approaches. The thinking was that this increasingly integrated approach would allow investment practitioners to achieve their financial and non-financial objectives more effectively. The research findings did not support this hypothesis. A potential reason why this hypothesis was invalidated may be because firms have already combined the sustainable investment strategies that are relevant for their objective(s) and no further integration is necessary. If this is the case, then this author’s initial assessment of sustainable investment firms underestimated the extent to which multiple strategies are already incorporated into the investment process. Instead of firms improving by combining more sustainable investment strategies, two main areas of concentration included active ownership and collaboration as outlined in Table 5-3. In regard to active ownership, firms expressed their intent to increase the cadence of engagements with company executives/management, prioritising sustainability issues by addressing them earlier in the meetings and developing internal capacity to provide guidance on sustainability issues. More sustainability issue engagement would increase the resources required by both investment firms and portfolio companies, but the benefits could include longer investment periods due to a more engaged relationship and superior company performance from working together to address difficult sustainability challenges. If one is interested in the advancement of sustainable finance, it is also encouraging that many of the firms studied wish to increase collaboration efforts. These activities were described in the form of sharing best practices, attending/organising educational events, and working with standards bodies. The finance industry in composed of a diverse ecosystem of stakeholders who all play a role in how the industry evolves. The collaboration efforts described could accelerate the rate of adoption of sustainable investment practices and increase the chances of success of implementation if firms can learn from each other. Conceptual Model AssessmentThe sustainable investment spectrum that was first outlined in Section 3.6, and displayed again below in Figure 5-1 for reference, played an influential role in shaping this research. It was informed by a collection of similar sustainable investment spectrum diagrams in the literature and aggregated to form the central conceptual model for this research. This conceptual model provided an overview of the main sustainable investment strategies. It was also used to structure the research questions and the case study interview questions as this research explored how sustainable investment strategies are actually used in practice. Throughout the research, especially during the interview process with investment practitioners, substantial evidence was collected that implied that there was room for improvement in this conceptual model as it does not clearly represent the practices of sustainable investing observed in this study. This of course is based on the view that practices observed in this study are representative of sustainable investing, which could benefit from further confirmation from further research. Figure STYLEREF 1 \s 5 SEQ Figure \* ARABIC \s 1 1: Sustainable investment spectrum conceptual modelSource: Adapted from Bridges, 2015; CFA, 2017; RIAA, 2019; Rockefeller, 2018A Case for a New Conceptual ModelThe conceptual model drawn from the extant literature at the start of this work is made up of the primary sustainable investment strategies (negative screening, best-in-class, integrated ESG analysis, active ownership, thematic investing, and impact investing), organised along a spectrum from left to right. This approach is investment strategy centric and the evidence from this study indicates that this can lead to the oversimplification of classifying investment firms by their sustainable investment strategy instead of their objectives. Upon interviewing investment practitioners, it was found that the firms selected integrate at least three sustainable investment strategies together. Moreover, interviewees such as Interviewee 11, communicated that in practice the application of these strategies is fluid and tailored based on the objectives and needs of the client (Interviewee 11, phone interview, July 31, 2019). This type of fluid approach is suggested in the literature as well with one report stating that “these categories are not mutually exclusive; often they are inter-dependent, with many investors operating between or across categories” ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Bridges","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2015"]]},"publisher-place":"London","title":"Bridges Spectrum of Capital: How we define the sustainable and impact investment market","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bridges, 2015)","plainTextFormattedCitation":"(Bridges, 2015)","previouslyFormattedCitation":"(Bridges, 2015)"},"properties":{"noteIndex":0},"schema":""}(Bridges, 2015). In light of these findings, a strong case can be made to reorient a new conceptual model towards a more objective centric approach. The spectrum that the sustainable investment strategies are organised along can also imply certain characteristics relative to each other that may not be accurate. Negative screening is positioned at the beginning of the spectrum which ends with impact investing on the right-hand side. This type of sustainable investment spectrum often implies that negative screening is the simplest and least sustainably rigorous compared to the most sustainably sophisticated strategy of impact investing. However, the interviews with practitioners revealed that the firms with the most focus on generating positive social and environmental impact all used negative screening as part of their strategy mix. In this work, this is interpreted to indicate that practitioners are less concerned about where the strategy falls on the spectrum and more interested in how the strategy could help support a particular objective. In-between these two extremes there is some consensus of where to plot the other sustainable investment strategies with the exception of active ownership. It seems that active ownership is either forced somewhere into the middle of the spectrum or it is left out entirely. One challenge with plotting this strategy along the spectrum is that it is a post-investment strategy sitting among primarily pre-investment strategies. Another issue with the current sustainable investment spectrum is that it includes a sustainable investment strategy that may be conflated with an overarching investment approach. It is argued here that impact investing is not an investing strategy and therefore it should not be placed along-side the other sustainable investment strategies within the conceptual model. Instead, it is a collection of strategies, investment mandates, and accountability characteristics combined with a worldview of how money can and should be utilized for positive change. As such it can be broken down into more defined components. When impact investment interviewees, were asked about their investment approach they never cited impact investing as a strategy deployed to construct their portfolio. For the pre-investment process, they described combining the strategies of an initial negative screen with thematic investing that aligned with their firm’s theory of change. These are the core activities that that allow an investor to communicate impact, identify key indicators and drive positive change ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.4102/aej.v6i2.340","ISSN":"2306-5133","abstract":"<p>Impact investing is becoming one of the largest forces in driving social and environmental change globally. However, how one defines, measures and communicates this impact is not well defined or consistently implemented. This can prevent investors from making well-informed decisions and allows for ‘impact washing’. The evaluation community has many tools that could be adapted and used in the world of impact investing. Theories of change allow for the better communication of impact, identification of indicators to be measured and critical interrogation of logic. The attributes of theories of change could assist in steering the growing force of impact investing towards gathering more investment and achieving greater impact. This paper is exploratory and examines the development and use of theories of change as a tool for impact investing and seeks to identify the benefits of the tool. We qualitatively review three case studies of organisations that have implemented theories of change and identify common key themes. We find that theories of change are a useful tool for the communication of impact, identification of indicators to be measured and for the critical interrogation of logic. However, theories of change do not provide a panacea to the impact challenge; the need to rigorously measure impact is not fulfilled by merely identifying what needs to be measured. Regardless, the use of theories of change adds an advantage in a space where others have not gone to the same length to show their commitment to driving change.</p>","author":[{"dropping-particle":"","family":"Verrinder","given":"Noel B.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Zwane","given":"Kagiso","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Nixon","given":"Debby","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Vaca","given":"Sara","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"African Evaluation Journal","id":"ITEM-1","issue":"2","issued":{"date-parts":[["2018","11","12"]]},"page":"9","title":"Evaluative tools in impact investing: Three case studies on the use of theories of change","type":"article-journal","volume":"6"},"uris":[""]}],"mendeley":{"formattedCitation":"(Verrinder, Zwane, Nixon, & Vaca, 2018)","plainTextFormattedCitation":"(Verrinder, Zwane, Nixon, & Vaca, 2018)","previouslyFormattedCitation":"(Verrinder, Zwane, Nixon, & Vaca, 2018)"},"properties":{"noteIndex":0},"schema":""}(Verrinder, Zwane, Nixon, & Vaca, 2018). This is usually followed by post-investment activities such as active ownership and impact measurement/reporting. In terms of investment mandate, a common characteristic of investors who are able to pursue social or environmental impact objectives is support from their investor base. Whether the firm is considered an impact investor or not, a clear investment mandate indicates key stake holder values and provides guidance for appropriate types of investments. Other characteristics that can be found within impact investing are the qualities cited by the GIIN of intentionality, additionality and measurability ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"This report presents findings from the Global Impact Investing Network’s eighth Annual Impact Investor Survey. These findings reflect 229 respondents’ perspectives on the growth and development of the impact investing industry. The report includes analysis of respondents’ investment activity, asset allocations, impact measurement practices, and performance. For the first time, the report also presents trends analysis for a subset of 82 respondents that participated in the survey in 2013 and again this year. Major market developments over the course of 2017 are also described throughout the report.","author":[{"dropping-particle":"","family":"GIIN","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"language":"English","title":"Annual Impact Investor Survey 2018: The Eighth Edition","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GIIN, 2018)","plainTextFormattedCitation":"(GIIN, 2018)","previouslyFormattedCitation":"(GIIN, 2018)"},"properties":{"noteIndex":0},"schema":""}(GIIN, 2018). Additionality and intentionality are part of the pre-investment process and the execution of measurability is often conducted within post investment activities such as reporting. Finally, the worldview of the investor is an impactful component when seeking to categorise them. The worldview expressed by Interviewee 7 was that money should be used to create a positive impact on society and the success of an investment should be measured by its social and environmental impact not just financial returns (Interviewee 7, phone interview, June 14, 2019). When unpacked, these characteristics are not only unique to impact investors, so it is important to identify these strategies and features that can be applied individually to other types of investors to achieve certain investment objectives. Conceptual Model Alternative The new conceptual model borrows from certain parts of each sustainable investment spectrum visualisation from the literature. Its constituent parts are then reorganised, more detail is provided, and new elements are added to the model based on learnings from the literature review, document analysis, and practitioner interviews. Revisions to the conceptual model are intended to reflect how investment practitioners view sustainable investment strategies as a fluid set of tools that can be shaped and combined based on their needs. Moreover, it redirects focus to question what the most appropriate strategy or combination of strategies can be based on the investment context and objectives. As such, the model is objective centric and presents possible sustainable investment strategy combinations based on this context. Table 5-3 synthesises a key category of findings from Section 4 to highlight the trends that emerged when documenting the types of sustainable investment strategies used given one of the primary sustainable investment objectives of values/norms alignment, improving risk/return profile, and maximising impact. The findings show that there is a significant amount of sustainable investment strategy similarity between investment firms with a common objective. For example, the firms whose objective was to improve the risk/return profile of their portfolio, utilised integrated ESG analysis as their primary strategy, supported by negative screening and active ownership as their complementary secondary strategies. Due to the strong correlation, these findings were used to inform the new conceptual model by reflecting on the strategy combination choices. Figure STYLEREF 1 \s 5 SEQ Figure \* ARABIC \s 1 2: Revised conceptual model based on findings from research The y-axis of revised conceptual model shown in Figure 5-2 is organised by the three main categories of sustainable investment objectives found in the literature review and the practitioners’ interviews. In this new model, the objectives now represent the key orienting variable and allows an investment practitioner to concentrate on possible combinations of sustainable investment strategies that are most applicable to their sustainable investment objective. Along the x-axis, the continuum chosen is the sequential investment process. Foundational work is conducted at the very beginning of the investment process and can be classified as preliminary exercises necessary to execute sustainable investment strategies. These preliminary elements have been sub-categorised into research activities and approaches. It should be noted that foundational work elements are not allocated to a specific sustainable investment objective since all of them could be applicable to any of the objectives depending on the scenario. It should also be noted that this is not an exhaustive list of foundational work that could be conducted; however, it represents the key preliminary activities that arose from interactions with case study firms. Other examples of foundational work activities could include carbon footprint measurement and SDG alignment analysis. The pre-investment stage involves company specific evaluations and investment decisions using a variety of sustainable investment strategies. The post investment stage occurs after funds have been allocated and the team is managing an active investment. This construction reimagines the presentation of sustainable investment strategies by organising them within distinct phases of the investment process where they could be applied. This is in contrast to the original conceptual model that depicts an x-axis spectrum from least sustainable to most sustainable, or least sophisticated to most sophisticated. In terms of the sustainable investment strategies populating the model, there are a few differences worth noting. There is a greater level of detail within the sustainable investment strategies now that variations within the strategy are identified to highlight different approaches within a single strategy. By classifying strategies into their sub-categories, the goal is to provide a greater number of specific tools to fit within various contexts and investors’ preferences. Another difference is that impact investing is no longer represented as a single strategy. Instead, it has been divided into its constituent parts of intentionality, additionality, measurability, theory of change, and thematic investing. These strategies are no longer associated with a particular investor class but presented as an expanded toolkit that could be applicable to a variety of investors with different objectives. This new conceptual model does not exist without limitations. One potential risk is that it may prescribe overly simplistic solutions to, what are in reality, complex scenarios with multiple variables. This author is not advocating a rigid formula for each scenario, but since this conceptual model is based on observations from sustainable investment practitioners, this visualisation could be seen as a suggested guideline based on the approaches of industry professionals. Another challenge is that there may be other versions of sustainable investment objectives that this research did not discover and therefore are not represented in this conceptual model. To present a new version of this conceptual mode with more certainty, more comprehensive research would have to be conducted. Finally, this conceptual model does not explicitly demonstrate how to account for the pursuit of multiple sustainable investment objectives. In this scenario multiple primary and secondary sustainable investment strategies would have to be combined to optimise for all the objectives. Industry ImplicationsAccording to a 2015 survey, only 37% of investment professionals are integrating sustainability considerations into their investment process ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"EY","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2015"]]},"title":"Tomorrow's Investment Rules 2.0 | 1","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(EY, 2015)","plainTextFormattedCitation":"(EY, 2015)","previouslyFormattedCitation":"(EY, 2015)"},"properties":{"noteIndex":0},"schema":""}(EY, 2015). Furthermore, global sustainable assets under management are growing at a significant rate, growing 34% from 2016-2018 ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"abstract":"In early 2017, the Global Sustainable Investment Alliance (GSIA) released the Global Sustainable Investment Review 2016, which collated the results from the market studies of regional sustainable investment forums for Europe, the United States, Canada, Japan, and Australia and New Zealand. In the period since the last report was released, the global sustainable investment market has continued to grow, and in most of the regions covered by GSIA’s member organizations, its share of professionally managed assets has also grown. This report summarizes the status of sustainable and responsible investing in these markets at the start of 2018. Generally","author":[{"dropping-particle":"","family":"GSIA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"1-29","title":"Global sustainable investment review 2018","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(GSIA, 2018)","plainTextFormattedCitation":"(GSIA, 2018)","previouslyFormattedCitation":"(GSIA, 2018)"},"properties":{"noteIndex":0},"schema":""}(GSIA, 2018). This data supports the trend that increasing numbers of investment firms will be adopting sustainable investment strategies in the near future. As new firms adjust their investment process to incorporate sustainability considerations, research and tools that provide integration guidance could be helpful. A conceptual model such as the one outlined in Figure 5-2 can help orient investment practitioners to the sustainable investment landscape and assist them in choosing appropriate sustainable investment strategies. This could be particularly helpful to investment practitioners who have less experience in the sustainable investing industry. Moreover, the findings regarding RQ1 show that the engaged practitioners are combining sustainable investment strategies to build their sustainable portfolios instead of simply choosing a single sustainable investment strategy. This suggests a fairly complex integration environment for investment practitioners where they will most likely require assistance in navigating the investment strategy choices. The results from RQ2 show that as investment practitioners plan to improve their sustainability practices, they are looking to their peers and industry stakeholders to collaborate. The practitioners interviewed don’t believe that their firms hold all the answers; therefore, a culture of learning from each other could help accelerate the effective adoption of sustainable investment practices. This approach also indicates that investment practitioners would like tools and strategies that reflect the best practices of their peers. This study has concentrated on reflecting the practices of investment firms within the proposed conceptual model. Collaboration outside of investment practitioners who directly make investment decisions could also help improve sustainable investment practices. As more defined combinations of sustainable investment strategies emerge, it could guide other sustainable investment stakeholders as to how they could effectively support investment decision makers. For example, it could inform ESG analysts about which types of data and other ratings information is most relevant to investment practitioners who integrate certain sustainable investment strategies. As the industry evolves, a key challenge is to combat the greenwashing or check boxing culture of superficially complying with sustainable investment standards ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1111/beer.12149","ISSN":"09628770","author":[{"dropping-particle":"","family":"Cetindamar","given":"Dilek","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Ozkazanc-Pan","given":"Banu","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Business Ethics: A European Review","id":"ITEM-1","issue":"3","issued":{"date-parts":[["2017","7","1"]]},"page":"257-270","publisher":"John Wiley & Sons, Ltd (10.1111)","title":"Assessing mission drift at venture capital impact investors","type":"article-journal","volume":"26"},"uris":[""]},{"id":"ITEM-2","itemData":{"URL":"","abstract":"Sustainable investing is growing in popularity. Jeff Shen talks with Debbie McCoy, Head of Sustainable Investing for BlackRock Systematic Active Equity, about her work to uncover the ESG metrics that matter most.","accessed":{"date-parts":[["2019","8","23"]]},"author":[{"dropping-particle":"","family":"Jeff Shen","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-2","issued":{"date-parts":[["2019"]]},"title":"Taking sustainable investing beyond box-checking | BlackRock Blog","type":"webpage"},"uris":[""]}],"mendeley":{"formattedCitation":"(Cetindamar & Ozkazanc-Pan, 2017; Jeff Shen, 2019)","plainTextFormattedCitation":"(Cetindamar & Ozkazanc-Pan, 2017; Jeff Shen, 2019)","previouslyFormattedCitation":"(Cetindamar & Ozkazanc-Pan, 2017; Jeff Shen, 2019)"},"properties":{"noteIndex":0},"schema":""}(Cetindamar & Ozkazanc-Pan, 2017; Jeff Shen, 2019). It is important to focus on results and move beyond a compliance mindset but this can be difficult to achieve ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"DOI":"10.1287/orsc.2015.1039","ISSN":"1047-7039","abstract":"Under increased pressure to report environmental impacts, some firms selectively disclose relatively benign impacts, creating an impression of transparency while masking their true performance. We ...","author":[{"dropping-particle":"","family":"Marquis","given":"Christopher","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Toffel","given":"Michael W.","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Zhou","given":"Yanhua","non-dropping-particle":"","parse-names":false,"suffix":""}],"container-title":"Organization Science","id":"ITEM-1","issue":"2","issued":{"date-parts":[["2016","3","2"]]},"page":"483-504","publisher":" INFORMS ","title":"Scrutiny, Norms, and Selective Disclosure: A Global Study of Greenwashing","type":"article-journal","volume":"27"},"uris":[""]},{"id":"ITEM-2","itemData":{"URL":"","abstract":"Sustainable investing is growing in popularity. Jeff Shen talks with Debbie McCoy, Head of Sustainable Investing for BlackRock Systematic Active Equity, about her work to uncover the ESG metrics that matter most.","accessed":{"date-parts":[["2019","8","23"]]},"author":[{"dropping-particle":"","family":"Jeff Shen","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-2","issued":{"date-parts":[["2019"]]},"title":"Taking sustainable investing beyond box-checking | BlackRock Blog","type":"webpage"},"uris":[""]}],"mendeley":{"formattedCitation":"(Jeff Shen, 2019; Marquis, Toffel, & Zhou, 2016)","plainTextFormattedCitation":"(Jeff Shen, 2019; Marquis, Toffel, & Zhou, 2016)","previouslyFormattedCitation":"(Jeff Shen, 2019; Marquis, Toffel, & Zhou, 2016)"},"properties":{"noteIndex":0},"schema":""}(Jeff Shen, 2019; Marquis, Toffel, & Zhou, 2016). Therefore, it is necessary for investment practitioners to start from a foundation of their primary sustainable investment objective and implement strategies that make meaningful changes to a portfolio instead of trying to improve the appearance of their sustainability report. In addition, a particularly important sustainable investment strategy to address green washing is pursuing measurability within the portfolio. As stated by some of the study’s interviewees, measuring and reporting on social and environmental investment impact can help keep a firm accountable to their stated goals and provide transparency to clients about the true impact of their portfolio. As it is still relatively early in the adoption and evolution of sustainable investment strategies within mainstream investment firms, logically there remains a need for more experimentation regarding how sustainable investment strategies can be integrated effectively in various contexts. Using this research as a starting point, investment practitioners could experiment with new combinations of sustainable investment strategies that could have undiscovered synergies. The hope is that this research and the alternative conceptual model could act as a catalyst for further exploration. Limitations Due to the exploratory nature of this research and resource constraints, certain methodology choices were made to executing the study. As a result, there are methodological limitations that have implications for this research in terms of legitimacy, validity and generalisability. This author believes that the research questions posed were legitimate; however, critical reflection is necessary to evaluate the confidence that can be associated with the research question answers. The analysis centers around a qualitative interview and document analysis approach. The research would benefit from quantitative statistical analysis to strengthen the conclusion regarding correlations between objectives and sustainable investment strategies as well as areas that firms aim to improve their sustainable investment practices. The fact that the research is based on a small sample size of eight case studies also affects the validity of results. Especially with respect to the construction of the proposed conceptual model, it is based on a small collection of correlations that needs to be further validated by assessing the practices of a wider scope of firms. The value of the conceptual model as it exists is to provide a starting point to offer suggested guidance in certain scenarios.With any case study based research the generalisability of findings is always a challenge. With this research, it is fair to question how representative the collection of case studies is to other sustainable investment firms. The scope of the research included different types of institutional investors from the USA, Canada and Europe, which led to a selection of firms with unique industry and regional characteristics. To increase the generalisability of findings, future research could either pursue a more comprehensive study that would represent an average depiction of firm practices or a more focused study that aims to make claims relevant to a particular region or type of institutional investor.ConclusionsSection 6 completes this research by communicating the key conclusions that have arisen out of the case studies examined. It then connects these conclusions back to the larger context that this research sits within, namely leveraging the financial system to address our most significant social and environmental challenges. Since this research has limitations and because sustainable investing is an evolving field, further research areas are identified. Finally, some overarching reflections are provided regarding the rate of systemic change within the finance industry relative to the urgency of the societal challenges. Key ConclusionsFindings regarding RQ1 made it clear that sustainable investment practitioners are not easily categorised by a single sustainable investment strategy. Instead the firms engaged combined usually three or more strategies to achieve their objective(s). Furthermore, sustainable investment approaches converged around three main categories of objectives: aligning a portfolio with values/norms, improving the risk/return profile, and maximising social/environmental impact. The research then went on to address RQ2 and found that as practitioners attempt to improve their sustainable investment practices, they are looking to their peers for inspiration and are actively pursuing opportunities for knowledge sharing. This feedback from investors pointed to a need for tools and guidance that are based on practitioners’ best practices. Based on the findings that sustainable investment practitioners are deploying strategies from an objective centric approach, combining multiple sustainable investment strategies to achieve their objective(s), and want guidance that reflects their peers’ actions, this author proposed an alternative conceptual model to better illustrate how strategies are deployed in practice. The new conceptual model challenges the approach of the conceptual model found in the existing literature. The key differences are that the literatures’ conceptual models take a sustainable investment strategy centric approach, do not address the combination of strategies, and do not consider the investment lifecycle from foundational work through to post-investment portfolio management. The objective with the final output of findings and the proposed conceptual model was to assist investment practitioners in effectively integrating sustainable investment strategies into their investment process based on how other practitioners have been proceeding. Research Significance This report began by identifying the magnitude of the most pressing social and environmental challenges that society currently faces. From the SDG funding gap to the investments needed to keep global temperatures below a rise of 1.5°C, the case is made for the role that the financial system can and must play to catalyse change on a meaningful scale and timeframe. Preliminary research revealed that one of the challenges inhibiting a sustainable financial system transition is a lack of guidance to assist investment professionals in integrating sustainable investment strategies into their investment process ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Orsagh","given":"Matt","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Allen","given":"James","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Sloggett","given":"Justin","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Georgieva","given":"Anna","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Bartholdy","given":"Sofia","non-dropping-particle":"","parse-names":false,"suffix":""},{"dropping-particle":"","family":"Douma","given":"Kris","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"number-of-pages":"177","title":"Guidance and Case Studies for Esg Integration: Equities and Fixed Income","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Orsagh et al., 2018)","plainTextFormattedCitation":"(Orsagh et al., 2018)","previouslyFormattedCitation":"(Orsagh et al., 2018)"},"properties":{"noteIndex":0},"schema":""}(Orsagh et al., 2018). Therefore, this research’s point of departure was to examine the details of how sustainable investment practitioners are deploying sustainable investment strategies in practice and how these learnings can assist industry stakeholders. The findings outlined in this report communicate how a collection of investment practitioners have successfully integrated sustainable investment strategies into their investment process. This information is then leveraged to generate a new conceptual model that has the potential to provide a new lens with which to view the sustainable investment strategy landscape. Overall, the research represents an opportunity to move the sustainable finance conversation forward and encourage the acceleration of sustainable investment strategy adoption among institutional investors. If sufficient adoption can be encouraged, there is a greater chance that the industry will move closer to a financial system that supports the social and environmental needs of society.Further ResearchAs indicated in Section 5.6, the limitations of this research provide a good starting point to identify areas for further research. The confidence with which conclusions are drawn in this research could be strengthened by a future study that narrows the scope of research to focus on a particular type of institutional investor and/or a particular geographic region. Another option is to pursue research that is wider reaching, potentially using surveys to collect data from a large sample size, in order to draw more generalisable conclusions. This research stops short of claiming to outline best practices for integrating sustainable investment strategies. Once there is more certainty in confirming the trends that this research begins to uncover, then developing a best practices guide would be very helpful for investment practitioners who wish to maximise their chances of success as they incorporate sustainable investment practices into their investment process. This type of research would involve not only the dimension of how sustainable investment practitioners are integrating sustainable investment strategies, but also which ones are demonstrating some definition of success. The challenge for researchers will be to find solutions that are not too prescriptive and yet provide concrete recommendations for portfolio construction and management. There is a need for more research regarding sustainable investment strategy combinations. This author did not find any literature that examined in detail the ways in which sustainable investment strategies can be combined and the possible benefits of doing so. This type of research could explore if there is an optimal combination of strategies to achieve each of the three key objectives (values/norms, risk-return, impact/sustainable development), or if there are other combinations of strategies that this research did not uncover. The findings from this research implied that the same sustainable investment strategy could be used to accomplish more than one objective depending on how it is used. Further research could explore how the different variations of individual sustainable investment strategies can be utilised to achieve different objectives. This research focused on how sustainable investment strategies are used once a firm has already decided to integrate some kind of sustainable investment practice. Future research could focus upstream from this unit of analysis by examining the process of integrating sustainable investment practices into an existing investment process and firm culture. This could include areas of focus such as strategies to encourage executive support, employee training, and investment mandate modifications. Structuring sustainable investment strategies around objectives has been proposed in this thesis based on the findings; however, objectives are just a first step towards meaningful impact. There is a need for further research to refine the techniques for measuring the impact of a portfolio. Specifically, there is a need to explore techniques for measuring the sustainability of an investment or portfolio. For example, how aligned is the portfolio with a 1.5-degree world? This author recognises that this research’s conclusion that impact investing is not a sustainable investment strategy but in fact a collection of strategies, investment mandates, and accountability characteristics is a contrarian assertion that many academics and investment practitioners may not agree with. Therefore, it could be helpful for further research to better define impact investing characteristics and how it relates to the rest of the sustainable investment industry. In general, the sustainable investment industry could benefit from clearer definitions and classifications so that industry stakeholders can communicate more effectively and set standards more clearly. If a broader scope of further research is considered, there is an opportunity for other academics to address the most significant barriers inhibiting the adoption of sustainable investment practices. This research makes the argument that lack of guidance regarding how to integrate sustainable investment strategies is a key barrier; however, there are certainly other barriers impeding more sustainable investment. Potential candidates include, investment timeframe, sustainable investment regulations, and executive behavioural change. Identifying, prioritising and presenting potential solutions to these barriers would be helpful not only for investment practitioners but other related stakeholders such as regulators. Final Reflections There are positive trends around sustainable investment strategy adoption. Data quality is improving, the case that sustainable investing is connected to financial performance is getting stronger, and there is an expanding track record of sustainable investment implementation to guide practitioners. Furthermore, this author had a number of encouraging conversation with investment practitioners throughout the research about their current practices and trajectory for improvement. There is much evidence to suggest that the finance industry is making progress with regards to sustainable investment practices, but is the industry moving fast enough and is the progress too incremental? The magnitude of our social and environmental challenges is significant in terms of the sums of money needed and the systemic change required, and this author has concerns about how much more change has to occur before the financial system can adequately meet these needs. The urgency of issues such as climate change emphasise that incremental progress is falling short and more radical solutions are necessary. A paradigm shift is needed in terms of what the financial system values and the timeframe over which it is considered. It is a shift that requires more than integrating extra-financial considerations into existing financial assessment methods. The hard truth that few want to acknowledge is that it probably requires more breaking than augmentation of existing systems. More broadly, this call for change is needed beyond a finance industry transformation. 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Progress in Industrial Ecology, An International Journal, 5(3), 236. , R. K. (2009). Canadian journal of action research CJAR. In The Canadian Journal of Action Research (Vol. 14). Retrieved from Appendix A – Interview GuideResearch Questions (for reference only)RQ1: How do market rate return equity investment practitioners combine sustainable investment strategies within their investment process? H1: Many investors don’t use a single sustainable investment strategy and are not easily defined by one subcategory of the sustainable investment spectrum. Instead, they combine strategies to meet the requirements of regulations, sustainable development objectives and maximizing financial returns.RQ2: How do market rate return equity investment practitioners plan to improve their sustainable investment practices? H2: Investment practitioners will increasingly use a collection of sustainable investment strategies to optimise security selection and achieve financial and non-financial objectives. Target interview length~45minsContextObjective of research is to assist investment practitioners in further integrating sustainable investment strategies into their investment process Aim to accomplish this by gaining a deeper understanding of the nuances of how sustainable investment strategies are deployed in and uncover the motivations behind different sustainable investment strategies Preamble Thank you for agreeing to speak with me today. Before we begin, I just want to assure you that any comments you make will be considered anonymous as has been requested. Therefore, any information that gets referenced in my research will not be connected to you personally or your firm. With that understanding, I’d like to ask you if you are comfortable with me recording this conversation so that I don’t have to focus on taking notes. The recording is just for my personal use and will not be shared with anyone. Is that ok? And of course, you’re welcome to stop the interview at any time. Do you have any questions before we start?QuestionsCould you please provide a brief overview of your role and responsibilities, especially as it relates to the sustainable investing practices of your firm?Can you outline the resources that your firm has at its disposal for sustainable investing practices (e.g. sustainability data, systems, and human resources)?Can you please walk me through your investment process and highlight where sustainability strategies are integrated? Potential interviewer prompts: Ask probing questions to explore certain areas of the investment process furtherWays in which sustainability data could be used: to establish investment universe, in the valuation of companies, monitor an investment, engage with management Investment strategies: negative screening, best-in-class, integrated ESG analysis, active ownership, thematic investing, impact investingCan you describe the motivations and objectives behind your sustainable investment strategies?Potential interviewer prompt: Remind interviewee of the sustainable investment strategies they indicated in question 3Objective examples: comply with regulations/international norms, values alignment, mitigate risk, generate alpha, create positive impactDifferentiate between internal motivations (board, management, investment policy) and external motivations (client demands, regulatory, societal norms)Do your sustainable investing strategies complement one another? And if so how? What do you believe your firm needs to improve with respect to your sustainable investing practices moving forward? Do you have plans in place for these changes? Potential interviewer prompt: differentiate between short term (within 1 year) and long term (> 1 year) plans Do you have any additional comments at this time? Follow-up QuestionsDo you have any recommendations for further documents or information I should review that might assist this research?Is there anyone you would suggest I connect with that could provide valuable insights for this research? Appendix B – Interview InformationOverview of Exploratory Interviews (Semi-Structured) InterviewDatePositionRegionInstitution TypeFormatDuration1May 13, 2019Sustainable Investment ConsultantSwedenConsultancyPhone35 mins2May 16, 2019Head of Sustainable InvestmentSwedenEndowment FundOnline44 mins3May 22, 2019Sustainable Investment AnalystSwitzerlandInvestment BankOnline45 mins4May 24, 2019ESG and Responsible Investment AdvisorUSAResponsible Investment ServicesPhone 49 minsOverview of Focused Interviews (Semi-Structured)InterviewDatePositionRegionInstitution TypeFormatDuration5June 8, 2019Partner and Fund MangerThe NetherlandsVenture Capital FirmOnline42 mins6June 13, 2019Portfolio ManagerCanadaInvestment Management Firm Online106 mins7June 14, 2019Director of StrategySwedenFamily OfficePhone58 mins8June 18, 2019Founding PartnerCanadaVenture Capital FirmEmailN/A9July 17, 2019Project Manager Sustainable InvestmentsSweden Pension FundOnline64 mins10July 23, 2019Sustainable Investing StrategistSwitzerlandWealth Management FirmEmail N/A11July 31, 2019Sustainable Investing Strategist Switzerland Wealth Management Firm Phone48 mins12 Aug 2, 2019Director of Environmental, Social, and GovernanceUSAPrivate Investment FirmEmailN/AAppendix C – Industry Sustainable Investment Spectrums (Conceptual Models)Bridges’ Spectrum of CapitalSource: ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Bridges","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2015"]]},"publisher-place":"London","title":"Bridges Spectrum of Capital: How we define the sustainable and impact investment market","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Bridges, 2015)","plainTextFormattedCitation":"(Bridges, 2015)","previouslyFormattedCitation":"(Bridges, 2015)"},"properties":{"noteIndex":0},"schema":""}(Bridges, 2015)CFA’s Spectrum of Sustainable Investment Source: ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"ISBN":"9781944960353","author":[{"dropping-particle":"","family":"CFA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2017"]]},"title":"Handbook on Sustainable Investments","type":"book"},"uris":[""]}],"mendeley":{"formattedCitation":"(CFA, 2017)","plainTextFormattedCitation":"(CFA, 2017)","previouslyFormattedCitation":"(CFA, 2017)"},"properties":{"noteIndex":0},"schema":""}(CFA, 2017)RIAA’s Responsible and Ethical Investment Spectrum Source: ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"URL":"","accessed":{"date-parts":[["2019","6","18"]]},"author":[{"dropping-particle":"","family":"RIAA","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2019"]]},"title":"RI Explained - Responsible Investment Association Australasia","type":"webpage"},"uris":[""]}],"mendeley":{"formattedCitation":"(RIAA, 2019)","plainTextFormattedCitation":"(RIAA, 2019)","previouslyFormattedCitation":"(RIAA, 2019)"},"properties":{"noteIndex":0},"schema":""}(RIAA, 2019)Rockefeller Foundation’s Capital Spectrum and Definitions ADDIN CSL_CITATION {"citationItems":[{"id":"ITEM-1","itemData":{"author":[{"dropping-particle":"","family":"Rockefeller","given":"","non-dropping-particle":"","parse-names":false,"suffix":""}],"id":"ITEM-1","issued":{"date-parts":[["2018"]]},"title":"The Rockefeller Foundation Mission-Related Investing","type":"report"},"uris":[""]}],"mendeley":{"formattedCitation":"(Rockefeller, 2018)","plainTextFormattedCitation":"(Rockefeller, 2018)","previouslyFormattedCitation":"(Rockefeller, 2018)"},"properties":{"noteIndex":0},"schema":""}(Rockefeller, 2018)Appendix D – Proposed Sustainable Investment Conceptual Model ................
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