What is ESG Improvers?

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The responsible investment market has become increasingly crowded in terms of supply, as many asset managers offer strategies focusing on responsible investing. As a consequence, being able to identify solutions offering what we believe are best-in-class opportunities in a packed universe, both in terms of performance and impact, could be perceived as challenging¹.

1.

Why can ESG improvers be a source of alpha?

It’s important to understand that ESG factors can play a relevant role in determining portfolios’ returns . For example, companies integrating ESG factors into their strategies should lead to a reduction of non-financial risks that may have negative impacts on financial performance, such as reputation, political and regulatory risks². As we invest primarily in companies that are on an improving ESG trajectory, we seek to get ahead of the crowd and therefore unlock return potential. 

2.

Why is it inclusive?

The beauty of an ESG Improvers philosophy is that we seek to find companies that are embarking on a positive ESG journey, across all sectors in the market. It is important to note that, ESG Improvers does not exclude companies involved in activities such as the extraction of fossil fuels, which usually bear a negative connotation. Amundi’s inclusive approach considers firms that are on a positive ESG path, regardless of their sector.

3.

Why is it different?

Most responsible investment strategies focus on ESG winners, i.e. the highest rated ESG companies today. Thanks to Amundi’s extensive expertise, consistent investment approach and continuous engagement with target companies, we aim to identify opportunities still not visible to our peers.

Through a fundamental integration of ESG factors, we seek to identify not only the ESG related risks, but also the ESG opportunities from a financial standpoint.

4.

What are ESG Improvers? What are ESG Winners?

Each company in the portfolio has strong investment fundamentals; they are selected through a detailed analysis that considers macro ESG trends, market movements, securities valuations and ESG key performance indicators (KPIs). The majority of the holdings are “ESG Improvers”, companies that are set to move forward on their ESG agenda. The remainder of the portfolio is allocated to what we call “ESG Winners”, these are the firms that are already well advanced in their ESG journey. If the investment case is correct, in our view our portfolio allocation should provide access to the ESG leaders of tomorrow, supporting future alpha generation.