PORTFOLIO DESIGN

Integrating sustainability

BlackRock |May 31, 2019

The merits of a data-driven approach

As sustainable investing gathers pace, we see a growing push for the integration of environmental, social and governance (ESG) considerations into the investment practices of investors. This is particularly relevant in Europe, where regulatory momentum is accelerating.

We explore how data analysis can help investors get to grips with ESG integration. Specifically, we outline a four-step approach that we believe can support investors in meeting the challenge and opportunity of ESG integration, using technology as an enabler:

Step 1: Assess the portfolio for hidden risks

Step 2: Understand where the key ESG risks are coming from

Step 3: Systematically implement ESG approach

Step 4: Embed and refine

We illustrate this approach through a hypothetical case study and explore the key trends that we think will drive data-based ESG integration.

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