E S G (ESG) I TOOLS A

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) INVESTMENT TOOLS: A REVIEW OF THE CURRENT FIELD

December 2017

PREPARED FOR: The Chief Evaluation Office, US Department of Labor Contract No. DOLQ129633250

PREPARED BY: Ogechukwu Ezeokoli China Layne, PhD Mier Statman, PhD Oswaldo Urdapilleta, PhD Summit Consulting, LLC 601 New Jersey Ave NW Suite 400 Washington, DC 20001 summitllc.us

ESG Investment Tools: A Review of the Current Field

DISCLAIMER

This report was prepared for the U.S. Department of Labor (DOL), Chief Evaluation Office, under Contract Number DOLQ129633250. The views expressed are those of the authors and should not be attributed to DOL, nor does mention of trade names, commercial products, or organizations imply endorsement of same by the U.S. Government.

i

SEGSGInIvnevstemstemnteTnotoTlso:oAlsR:eAvieRwevoifetwheoCfutrhreenCt uFirerlednt Field

ACKNOWLEDGEMENTS

We would like to thank Sonal Mahida, and Dr. David Wood for providing technical input regarding the content of the literature review and design of the environmental scan. We would also like to thank the staff at the U.S. Department of Labor's Employee Benefits Security Administration (EBSA) and the Chief Evaluation Office who provided feedback and guidance in this study. Special thanks are due to our Contracting Officer Representatives, Janet Javar and Dr. Kuangchi Chang of the Chief Evaluation Office, who provided valuable feedback. We are also grateful for the detailed review provided by EBSA's Lynn Johnson.

ii

SEGSGInIvnevstemstemnteTnotoTlso:oAlsR:eAvieRwevoifetwheoCfutrhreenCt uFirerlednt Field

TABLE OF CONTENTS

EXECUTIVE SUMMARY .......................................................................................................................... I INTRODUCTION ................................................................................................................................... 1

ESG INVESTING AND ESG INVESTMENT TOOLS ................................................................................................... 1 IMPORTANCE OF ESG INVESTING TO RETIREMENT SECURITY ................................................................................. 3 REVIEW OF LITERATURE ON ESG INVESTING AND RETIREMENT SAVINGS............................................. 6 RESEARCH QUESTIONS AND METHODOLOGY ...................................................................................................... 6 WHO ARE THE KEY INVESTORS IN BOTH THE ESG INVESTING AND RETIREMENT SAVINGS SECTORS?............................ 6 HOW DO KEY INVESTORS ASSESS ESG INVESTMENTS FOR GENERAL AND RETIREMENT INVESTMENT PORTFOLIOS?........ 8 WHAT ARE THE COMMON CHALLENGES AND CRITIQUES OF THE METHODS FOR ASSESSING ESG INVESTMENTS? ........ 11 ESG INVESTING AND RETIREMENT SAVINGS: PRESENT STATE AND FUTURE POSSIBILITIES......................................... 17 ENVIRONMENTAL SCAN OF ESG INVESTMENT TOOLS ........................................................................ 18 RESEARCH QUESTIONS AND METHODOLOGY .................................................................................................... 18 ASSESSMENT OF ESG INVESTMENT TOOLS BY KEY FEATURES .............................................................................. 21 COMPARING ESG INVESTMENT TOOLS BY THEIR UTILITY .................................................................................... 25 ESG INVESTMENT TOOLS MATRICES BY TOOL CATEGORY ................................................................................... 26 CONCLUSION ..................................................................................................................................... 39 REFERENCES....................................................................................................................................... 41 GLOSSARY BY TOPIC........................................................................................................................... 45 APPENDIX A ? LIST OF ESG INVESTMENT TOOLS................................................................................A-1 APPENDIX B ? COMPLETE PROFILES OF ESG INVESTMENT TOOLS (INCLUDED IN MATRICES)..............B-1 APPENDIX C ? SUMMARIES OF ESG RATING METHODOLOGIES ......................................................... C-1

iii

SEGSGInIvnevstemstemnteTnotoTlso:oAlsR:eAvieRwevoifetwheoCfutrhreenCt uFirerlednt Field

LIST OF FIGURES

Figure 1: ESG Investing Landscape................................................................................................................ 7 Figure 2: Process for Conducting Environmental Scan of ESG Investment Tools ....................................... 19 Figure 3: Investments Covered by the ESG Investment Tools .................................................................... 22 Figure 4: Financial Information Provided by ESG Investment Tools ........................................................... 24 Figure 5: Fees for ESG Investment Tools..................................................................................................... 25 Figure 6: Comparison of ESG Investment Tools for Mutual Fund and ETFs ............................................... 27 Figure 7: Comparison of ESG Investment Tools for Companies ................................................................. 30 Figure 8: Comparison of ESG Indices .......................................................................................................... 35 Figure 9: Other Types of ESG Investment Tools.......................................................................................... 38

LIST OF TABLES

Table 1: General Investment Strategies for ESG Investments ...................................................................... 8 Table 2: Issues with ESG Investment Strategies ......................................................................................... 12 Table 3: Issues with ESG Investment Strategies ......................................................................................... 20 Table 4: ESG Investment Tool Utility Criteria.............................................................................................. 21 Table 5: ESG Investment Tool Categories ................................................................................................... 21 Table 6: In-Scope ESG Investment Tools (28) ............................................................................................. 22

iv

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download