Integrating ESG Factors to Enhance Investment Decisions: Summary

A First Step. Material sustainability issues matter to investment performance. While there is no consensus about the weight to be given to ESG factors in investment decisions, we take a first step in addressing the issue.

A Rudimentary Approach. We estimate how much of regions’ and sectors’ valuations are attributable to ESG factors, and base our ESG weights on those attributions.

ESG Weightings. ESG factors have an 18% weighting in our regional strategy model, and a 9% weighting in our sector model.

Strategy Implications. There are no changes to the rankings in our regional or sector strategy models as a result of the ESG weightings that have been introduced.

Figure 1:  Integrating ESG Factors to Enhance Investment Decisions

Geraghty weightings cover graphic

Source: Cornerstone Capital Group

 

Click here for important disclosures. Our full report is available to clients of Cornerstone Capital Group.

Michael Geraghty is the Global Markets Strategist for Cornerstone Capital Group. He has over three decades of experience in the financial services industry including working as an investment strategist at UBS and Citi.