Targeted Sustainability
Authors
Andrew Dougan, Fong Yee Chan & Elizaveta Nebykova
FTSE Russell
Report Date
June 1, 2020
Document summary
This clear and insightful paper examines the dilemma that investors face in unpicking the risks and opportunities associated with the low carbon transition. As understanding of the complex and interlinked ESG factors underlying company performance are better understood, it is apparent that simple sustainable investing benchmarks are not the most appropriate tools for constructing robust portfolios.
This paper examines how:
- multiple SI objectives can be incorporated in an index in a transparent and flexible manner.
- “Target Exposure” methodology can be used to incorporate precise Low Carbon and ESG outcomes, and;
- precisely targeted SI solutions can be designed for ease of implementation and limited levels of tracking error.
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