Part I: Module 1: ESG - An Introduction

EFFAS
Certified
Environmental
Social
Governance
Analyst ®
Part I: Module 1
ESG – An Introduction
The European
Federation of
Financial Analyst
Societies
Sophienstraße 44, 60487
Frankfurt am Main
office@effas.com
www.effas.com
NB: The 2020 update to this
programme has amended or updated
information on certain pages to reflect
the most up to date information
available at the time of the update.
The list of pages which have been

updated is: 4, 6, 7, 9, 10, 12, 14, 19, 20,
Topics 21, 22, 23, 34, 35, 36 & 40. These

pages will be different to those in the
programme video and any new
information is explained in the
additional short video for this module
which focuses specifically on these
updates.
1.1 ESG investment – Where do we stand?

1.2 Definitions and developments
1.3 ESG strategies
1.4 Profit or purpose? Both!
Certified ESG Analyst ® ESG – An Introduction Page 2

© EFFAS 2020
1.1 ESG Investment – Where do we stand?

© EFFAS 2020
Updated 2020
Relative Google Search volume of topic “ESG” in Finance context, Regional concentration of relative Google Search volume of topic
globally: 20-times increase in the last 5 years “ESG” in Finance context: a global movement
100
90
80
70
60
50
40
30
20
10
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Numbers represent search interest relative to the highest point on the chart for the given time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. A score of 0 means that there was not Source: Google Trends 2020
enough data for this term. The regional point score of 100 is given to the location where the highest popularity was achieved in proportion to the total number of search queries.

© EFFAS 2020
Source: Schroders Global

Investor Study 2017

© EFFAS 2020
1.1 ESG investment – Where do we stand? Updated 2020
Huge global investor commitment: 86 trn USD AuM of PRI Signatories – close to 50% of the total global
outstanding bonds and equities* *2019 PRI data are effectively YE 2018. Comparison against YE 2018 numbers
of WFE (76,77 trn USD total equity market cap) and BIS / SIFMA (102,79 trn
USD total outstanding bonds).
Assets under management (US$ trillion) Nº Signatories
100 2750
90 2500
80 2250
2000
70
1750
60
1500
50
1250
40
1000
30
750
20 500
10 250
0 0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: PRI 2020, The World
Federation of Exchanges 2020,
Total assets under management Asset owners' assets under management Number of asset owners Number of signatories BIS 2020, SIFMA 2019

© EFFAS 2020
…however, responsibly invested AuM in a narrower sense responsibly invested money is smaller
Global Sustainable Investment Review, 2018
GROWTH OF SUSTAINABLE INVESTING ASSETS BY REGION IN LOCAL CURRENCY 2014–2018
Growth Per Period Compound
Annual
Growth
Growth 2014– Growth 2016– Rate (CAGR)
2014 2016 2018 2016 2018 2014–2018
Europe € 9,885 € 11,045 € 12,306 12% 11% 6%
United States $ 6,572 $ 8,723 $ 11,995 33% 38% 16%
Canada (in CAD) $ 1,011 $ 1,505 $ 2,132 49% 42% 21%
Australia/New Zealand (in $ 203 $ 707 $ 1,033 248% 46% 50%
AUD)
Japan ¥ 840 ¥57,056 ¥231,952 6692% 307% 308%
ASSETS BY REGION IN US-DOLLAR, 2016–2018 ASSETS BY ASET CLASS 2018
Region 2016 share 2018 share

Europe $ 12,040 $ 14,075
53% 46%
United States $ 8,723 $ 11,995
38% 39%
Japan $ 474 $ 2,180
2% 7%
Canada $ 1,086 $ 1,699
5% 6%
Australia/New Zealand $ 516 $ 734
2% 2% Source: GSIA 2018
TOTAL $ 22,890 $ 30,683

© EFFAS 2020
Eurosif, Assets of ESG Strategies in Europe, 2017 (mln. Euro) Eurosif, Assets of ESG Strategies in Europe, 2013- Eurosif, Assets by investor
2017 (mln. Euro) type
Countries Best-in- Sustain- Norms- ESG Inte- Engagem Exclusions Impact
Europe Class ability based gration ent and Investing
Themed Screening Voting
in € million 10.000 3,4%
Austria 14 023 992 9 871 3 695 12 358 76 543 1 030
(15 145) (32 439) (35 920) (14 382) 22,1%
8.000 30,8%
Belgium 15 570 8 101 31 654 97 428 18 502 249 014 1 151
Denmark 100 65 50 080 16 527 23 820 211 048 0
France 295 178 20 620 1 845 679 920 055 23 897 768 128 1 894 6.000
Germany 22 068 9 184 50 789 49 612 92 084 1 487 161 5 232
(554 445) (984 334) (881 470) (83 336) 4.000
Italy 58 137 52 861 105 842 70 425 135 729 1 449 554 51 960
The 83 449 7 125 631 721 627 477 724 809 724 704 1 391 96,6%
Netherlands 2.000
Poland 0 0 6 841 2 500 5 431 7 181 0 77,9%
69,2%
Spain 10 364 12 665 11 327 67 995 11 750 176 742 9 171 -
Sweden 25 419 1 966 305 833 297 182 874 724 720 292 6 422
Switzerland* 40 889 18 775 64 435 77 069 77 925 2 348 797 15 041
(462 094) (325 923) (1 386 (84 228)
026)
United 20 536 16 463 28 391 2 007 847 2 854 400 2 195 394 15 284
Kingdom
Overall 585 734* 148 840 3 147 981 4 239 932 4 857 550 9 464 485 108 575
(gross) 2013 2015 2017
* modified Table 33 of Eurosif 2018 2013 2015 2017 Retail Institutional
Note: The table represents the best fit for the SRI approaches that have been historically used
by Eurosif and its members for the FNG countries. The data in parenthesis refer to the
application of a different methodology for Austria, Germany and Switzerland by FNG. Source: Eurosif 2018

© EFFAS 2020
2018 Breakdown of all reported PRI AuM by asset class (% AUM) 2019 Breakdown of all mutual fund ESG AuM by asset class and
region (% AUM)
3%
0%
13% 16%
11%
18%
65%
74%
Equity Fixed Income Allocation Other Europe Asia Pacific United States RoW
Source: unpri.org (2019), Morningstar 2020

© EFFAS 2020
Updated 2020
The growth in ESG regulation Regional differences of ESG regulation
Number of RI-related policy instruments over time across the World’s

50 largest economies
Source: UN PRI 2019, Carrots

and Sticks 2016

© EFFAS 2020
Mainstreaming ESG – global milestones
UK
India: National
Start of Carbon Denmark: largest 1100 companies Stewardship
German Launch of UN Principles of Stock Exchange
Disclosure are required by law to report on Code Draft
HGB: Responsible Investment starts to promote German
Project (CDP) their corporate responsibility
company (UN PRI) ESG investor UN Sustainability
obligation to efforts awareness Code
Start of EU Commission: on Convention
report on Al Gore: An China: SASAC & Shanghai on Cluster
Global ESG aspects: Inconvenient Truth Stock Exchange disclosure of ESG
Reporting information Munitions in Denmark: Policy
§ 315 (1) § SEC: ESG
Initiative Sustainability Disclosure force „Action Plan for
289 (3) Disclosure
(GRI) Guidelines CSR“
US Executive Work Plan
Start of EU Pay Limits
Emission
Trading
... 2003 ... 2006 2007 2008 2009 2010 2011 2012
CFA Institute Manual

Bloomberg MSCI acquires
on ESG Factors Spanish
starts ESG RiskMetrics
Sustainable France: Grenelle
information Economy Law Act II (milestone
Thomson Article 39 towards
RiskMetrics Reuters integrated
acquires aquires Asset4 reporting)
DVFA/EFFAS KPI’s on
ESG launched Innovest /
KLD

© EFFAS 2020
Mainstreaming ESG – global milestones

EU directive: United Nations
Sweden: Guidelines non-financial EU High-Level
on environmental General Assembly Expert Group
disclosure agrees the
information in the The (HLEG) on
Directors’ Report The International Sustainability Sustainable sustainable
section of the Annual Integrated Accounting Development Goals finance
Reporting UK PRA UK FCA proposes
Report Standards Board Task Force on
Council: IIRC G20 Green Supervisory climate risk
(SASB): sector Climate-Related
framework Finance Agenda Statement reporting duty
standards Financial
Disclosures European Green
(TCFD) Deal
2013 2014 2015 2016 2017 2018 2019 2020 …
Japan
Corporate EU Technical
Italy: National EU action plan
Governance Securities and Expert Group
Action Plan for on sustainable
Code Futures (TEG) on
Corporate Social finance
PRI France (Art. 173): Paris Commission sustainable
Responsibility; Network for greening
Montréal Mandatory ESG Climate (SFC) finance
Social reporting the financial system
Carbon Reporting (incl. Agreement announced
standards (NGFS)
Pledge carbon footprint (COP 21) strategic
reporting) framework
Hong Kong

© EFFAS 2020

© EFFAS 2020
1.2 Definitions and developments Updated 2020
Terminology and Definitions
• Sustainable development is development that meets the needs of the present without
compromising the ability of future generations to meet their own needs (Brundtland Report
- World Commission on Environment and Development 1987).
• Triple Bottom Line “focuses corporations not just on the economic value that they add, but
also on the environmental and social value that they add – or destroy” (Elkington 2004).
• Corporate Social responsibility (CSR)…“is the responsibility of enterprises for their impacts
on society” (European Commission 2011).

© EFFAS 2020
• Corporate sustainability can be defined as the capacity of companies and organisations to remain
productive over time and to safeguard their potential for long‐term maintenance of profitability. Being
sustainable means that companies actively pursue goals such as responsible use of natural resources both in
their own operations and the operations of their respective clients, as well as respecting social rights in their
markets of operation and those markets where their products and services are in use and being accountable
to providers of equity and debt capital (EFFAS).
• Socially Responsible Investment/Sustainable and Responsible Investment (SRI): “ethical investments,

responsible investments, sustainable investments, and any other investment process that combines
investors’ financial objectives with their concerns about environmental, social and governance (ESG) issues”
(Eurosif 2008, 6) or simply “investments that take into account environmental, social and governance (ESG)
factors” (Scholten/Dam 2012), or more precise “Responsible investment is an approach to investing that
aims to incorporate environmental, social and governance (ESG) factors into investment decisions, to better
manage risk and generate sustainable, long-term returns.” (PRI 2019)

© EFFAS 2020
• ESG: environmental, social and governance factors

• Extra Financial Information, i.e., information on issues that are not directly monetizable per se
(Bauer 2007) [synonymously but misleading: non financial]
• Long term investing: “investing with the expectation of holding an asset for an indefinite period
of time by an investor with the capability to do so.” (World Economic Forum 2011)
• Engagement: direct contact between a shareowner and an issuer (including a board member)
(ISS & IRRC 2011, p. 7)
• Impact Investments “are investments made into companies, organizations, and funds with the
intention to generate measurable social and environmental impact alongside a financial return.”
J.P. Morgan/Global Impact Investing Network (GIIN)

© EFFAS 2020
1.3 ESG Strategies

© EFFAS 2020
1.3 ESG strategies
Comparison of classifications: largely congruent definitions of approaches
Eurosif GSIA-equivalent PRI-equivalent EFAMA-equivalent
Exclusion of holdings Negative/ Negative/ Negative
from investment universe exclusionary screening exclusionary screening screening or Exclusion
Norms-based screening Norms-based screening Norms-based screening Norms based approach
(type of screening)
Best-in-Class Positive/ Positive/ Best-in-Class
investment selection best-in-class screening best-in-class screening policy
(type of screening)
Sustainability themed Sustainability-themed Sustainability themed investing Thematic investment (type
investment invest-
ing of screening)
ESG integration ESG integration Integration of ESG issues -
Engagement and voting on Corporate engagement and Active ownership and engage- Engagement (voting)
sustainability matters shareholder action ment (three types):
• Active ownership
• Engagement
• (Proxy) voting and
• shareholder resolutions
Impact investing Impact/community - -
investing Source: Eurosif, 2018:
European SRI Study.

© EFFAS 2020
1.3 ESG strategies Updated 2020
(Values-based) exclusions
Exclusion of companies deriving a significant part of
their revenue or profit from activities seen as negative
for society: Eurosif, composition of exclusions in Europe
• Common exclusion criteria:

• Arms
• Gambling
• Pornography
• Tobacco & alcohol
• …
• Environmental criteria:
• GMO (genetically modified organisms)
• Nuclear energy
• Fossil fuel extraction
• …
Source: Eurosif, 2018:
European SRI Study.

© EFFAS 2020
Norms-based exclusions
Exclusion of companies that violate internationally (or
nationally) recognized norms or conventions:
• UN Global Compact Principles
• Universal Declaration of Human Rights
• International Labour Organization’s Declaration on
Fundamental Principles and Rights at Work
• Rio Declaration on Environment and Development
• United Nations Convention against Corruption
• Etc.
Source: Government Pension Fund of

Norway 2015 (for illustrative purposes)

© EFFAS 2020
Best-in-class Example Arabesque S-Ray

Selection of companies with the best
environmental, social and governance
practices
• Main characteristics:
• Mainly active equity strategies
• Bias towards large-cap companies
• Increasingly used in fixed income
strategies
Source: Arabesque S-Ray

2020 (for illustrative
purposes)

© EFFAS 2020
Best-in-class – Example Zurich Cantonalbank approach for Large Caps

Exclusion criteria
ENVIRONMENTAL SOCIAL GOVERNANCE

Environment Reputational risks Shareholder rights
50 %
CO2 emissions diversity renumeration Quantitative
use of water Health and safety transparency process
waste Stakeholder relations Internal controls
Data quality Human rights reporting
environmental mgmt Business ethics
supplier
Qualitative
Product - & sector analysis
process
Sustainable Investment Universe
Source: Zurich
Cantonalbank 2012, for
illustrative purposes

© EFFAS 2020
Best-in-class – Example Zurich Cantonalbank approach for Large Caps

REGION Sector
EUR Banks
Company Region Sector ESG-Score
PG NAM Consumer 74%

Software
NAM Colgate-Palmolive NAM Consumer 71%
Avon NAM Consumer 69% Retailers

… …
PAZ … …
… … Consumer
Estee Lauder NAM Consumer 42%
EMMA Church & Dwight NAM Consumer 27% others

Source: Zurich
Energizer NAM Consumer 20% Cantonalbank 2012, for
illustrative purposes

© EFFAS 2020
1.3 ESG strategies
Sustainability themed
Selecting companies active in sectors or themes related to sustainable development challenges:
• Main themes:
• Renewable energies
• Water
• Mobility
• Resource-Efficiency
• Demographics & Aging
• …
• Main characteristics:
• Mainly active equity strategies
• Bias towards small- and mid-cap companies
• …

© EFFAS 2020
1.3 ESG strategies
Sustainability themed investment
Sustainability themed – Example BNP Paribas
Source: BNP Paribas

Asset Management and
Eurosif 2017

© EFFAS 2020
1.3 ESG strategies
ESG integration
ESG integration defines practices by traditional financial management that take environmental,
social and corporate governance aspects into account throughout the investment decision-making
process:
• Common motives
• Seek primarily financial advantage from the integration of (materially) relevant ESG aspects
and indicators
• (Reputational) risk management
• Main barriers
• General knowledge about goals and possibilities
• Related direct and indirect costs
• ESG data availability and understanding

© EFFAS 2020
1.3 ESG strategies
ESG integration – Example Blackrock (Aladdin) Example DWS
Source: 2017 Blackrock impact Screens ESG Impact Tech power. The growing role of technology in sustainable
investing, page 5. (Included in Complimentary documents). https://download.dws.com/download?elibassetguid=a30d4fc2df4b418c956389cd6bb58ad8&wt_eid=2157684870500793809&wt_t=1609937648534

© EFFAS 2020
1.3 ESG strategies
ESG integration – scope (exemplary, across different analysis and portfolio levels)
Current practises of US investors

theoretical full integration
Source: CFA and PRI 2018 ESG INTEGRATION IN THE AMERICAS: MARKETS, PRACTICES, AND DATA https://www.cfainstitute.org/-/media/documents/survey/esg-integration-in-the-americas.ashx . See pages 8 and 80 for these pie charts.

© EFFAS 2020
1.3 ESG strategies
Engagement and voting
Engagement(s) are all interactions between an investor and investees or policy makers to address ESG issues
or business strategy. The objective of engagement can be to monitor performance or to exercise influence
over a company’s practice and performance on ESG issues. (UN PRI)
Proxy Voting is the investor’s practice to actively exert the voting rights at the annual general meetings (AGM)
of the companies. Either ESG and/or traditional issues are taken into consideration.
• Strengthened role and obligation of shareholders through e.g.

• UK Stewardship Code (2011)
• Dodd-Frank Act / SEC’s Rule 14a-11 (2010 / 2011)
• EU Commission Action Plan for more engaged shareholders and sustainable companies (2012)
• Revised EU Shareholders’ Rights Directive (Directive 2017/828 EC)
• Growing role of universal owners / asset concentration leads to a greater desire for disclosure and a
reduction of exit opportunities (Exit vs. voice)
• Impact of “say on pay” goes beyond compensation
• Shift in shareholder proposal topics and trend for proposal withdrawals
• Board accountability measures continue to strengthen
• Director opposition votes show change in voting practices

© EFFAS 2020
1.3 ESG strategies
Engagement and voting on EU level: Revised Shareholder Rights Directive 2017/828 EC
• Strengthening shareholders’ rights and facilitating cross-border voting: shareholder identification,

transmission of information, facilitation of exercising voting rights through proxy voting
• Encouraging long-term engagement of institutional investors and asset managers: transparency of
institutional investors and asset managers on investment strategy and engagement with investee
companies through obligatory disclosure of engagement policy (“comply or explain” approach)
• Increased transparency on proxy advisors
• Shareholders have a “say on pay” through voting right
Remaining challenges
• Cross-border voting remains difficult and costly  Directive 2017/828 EC step forward in
addressing these issues; continuous dialogue between EU Commission and UN PRI for further steps
• Remaining uncertainties regarding shareholder cooperation impede active ESG dialogue Source: Directive 2017/828 EC;
UNEP, UN PRI, Generation
Foundation (2017); European
Commission 2017

© EFFAS 2020
1.3 ESG strategies
Engagement and voting: Management dialogue
• Investor’s practice to seek direct dialogue with the management of companies with the goal to improve their practices
in financial and ESG-related aspects e.g.:
• Topics: Climate change, labour and supply chain issues, environmental practices
• Governance: Board-level responsibility for CR and integration in compensation structure
• Reporting & Standards: Integrated view with link to business strategy; compliance with relevant standards or codes
• Information and progress: data, targets, indicators use, progress against stated objectives and strategies
• Balanced view
• Engagement can be conducted on various intensity levels:

• Shareholder letters, management meetings, public dialogue , AGM speeches , collaborative actions
• Characteristics
• Direct dialogue with executive management and/or board
• Dialogues usually remain “behind closed doors”
• Reflection of both risks and opportunities Source: Eurosif 2012, IR Society
Best Practice Check List 2012

© EFFAS 2020
1.3 ESG strategies
Successful PRI-coordinated engagements by broad theme (2007-2017), Dimson et al. 2017
Source: Dimson et al. 2017

© EFFAS 2020
1.3 ESG strategies
Engagement and voting: Proxy Voting
• Investor’s practice to actively exert the voting rights at the annual general meetings (AGM) by the
investor or a proxy voting agency with common motives:
• Comply with fiduciary duty (institutionals)
• Comply with regulatory framework (institutionals)
• Seek strategic changes, particularly if passive investment strategies are employed
• Others
• Main challenges:
• Costs and benefits
• Free-rider problem
• Conflicts of interest
• Lack of transparency
Source: Eurosif 2012

© EFFAS 2020
Engagement and voting: Filing of resolutions
• Investor’s practice to actively file specific resolutions Total number of governance, environmental and social
resolutions filed in the US from 2011 to 2019
with the goal of receiving a majority vote at the annual
general meetings (AGM) with typical motives:
• Seek strategic changes, particularly if passive investment
strategies are employed
• Create public pressure on company (vs. dialogues behind
closed doors)
• Main barriers:
• Costs and benefits
• Free-rider problem
• Conflicts of interest
Source: Eurosif 2012; PRI
2018; ISS 2019

© EFFAS 2020
Leading ESG Issues in US by Number of Shareholder Proposals Filed Support for ESG Issues in US over time
(share of proposal with more than 30%
support of votes cast)
Source: ISS 2019, US SIF

2018

© EFFAS 2020
Impact investing
Definition: investments made into companies, organizations and funds with the intention to generate social and
environmental impact alongside a financial return. Investments are often project-specific Investor retains ownership of
the asset and expects a positive financial return.
Characteristics Main challenges

• Intentionality – The intent of the investor to generate social and/or • appropriate capital across the risk/return
environmental impact through investments is an essential component of spectrum;
Impact investing; • high-quality investment opportunities (fund
• Investment with return expectations – Impact investments are expected or direct) with track record
to generate a financial return on capital and, at a minimum, a return of • suitable exit options, innovative deal/fund
capital; structures to accommodate investors’ or
• Range of return expectations and asset classes – Impact investments investees’ needs
generate returns that range from below market to risk-adjusted market • common understanding of definition and
rate. Impact investments can be made across asset classes, including but segmentation of the impact investing market
not limited to cash equivalents, fixed income, venture capital and private
equity;
• Impact measurement – A hallmark of Impact investing is the
commitment of the investor to measure and report the social and
Source: GIIN 2011, Eurosif
environmental performance and progress of underlying investments 2016

© EFFAS 2020
1.3 ESG strategies
Summing up: The ESG-Investing Spectrum
Source: RIAA 2018 (adapted from

Bridges Fund Management, Sonen
Capital, and Impact Management
Project

© EFFAS 2020

© EFFAS 2020
Motives
• Financial motive
• Primary motive: “Use ESG-Information for better valuation and investment-decisions”
• Sustainability motive
• Primary motive: “Generate an effect/impact through sustainable & responsible investing
practices” (e.g. health improvement, sustainable land use, reduction in poverty)  social
preference and social signaling
• Secondary motive: “Earn at least market-conform returns with sustainable & responsible
investing solutions” (risk and return)

© EFFAS 2020
1.4 Profit or purpose? Both! Updated 2020
The angles of different theoretical concepts: finding a business-society balance

Main corporate
Profit Maximization objective Profit through purpose
Management
short-term Horizon long-term
Consideration of
Only if required by law Comprehensive view
external costs
Management
Shareholder Theory Stakeholder Theory
Theory Frame
Homo economicus / self- Conception of Homo practicus / socially

interested / competitive individual actor embedded / collaborative
Focus / Motive Business & Society /

Business / financial
financial & social
Source: compare e.g. Donaldson and

Walsh 2015, Freeman et al. 2007, Ghoshal
2005, Jensen and Meckling 1976

© EFFAS 2020
Three quotes to think about
• “Genomes, cells, multicellular organisms, social insects, and human society are all based on
cooperation.” (Nowak, 2006)
• “The very nature of capitalism itself is putting together a deal, or a contract, or a set of
relationships among stakeholders so that all can win continuously over a long period of time.”
(Freeman, Harrison, Wicks 2007)
• “Purpose is not the sole pursuit of profits but the animating force for achieving them. Profits
are in no way inconsistent with purpose - in fact, profits and purpose are inextricably linked.”
(Larry Fink’s 2019 Letter to CEOs)

© EFFAS 2020
Takeaways
• ESG / RI on the way to become market standard

• Dynamic market with high growth rates
• Different strategies for different objectives
• Profit and purpose are not conflicting goals: ESG / RI as the more human
conception of investing

© EFFAS 2020

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EFFAS

The list of pages which have been

Topics 21, 22, 23, 34, 35, 36 & 40. These

1.1 ESG investment – Where do we stand?

Certified ESG Analyst ® ESG – An Introduction Page 2

Certified ESG Analyst ® ESG – An Introduction Page 3

Certified ESG Analyst ® ESG – An Introduction Page 4

Source: Schroders Global

Certified ESG Analyst ® ESG – An Introduction Page 5

Assets under management (US$ trillion) Nº Signatories

Certified ESG Analyst ® ESG – An Introduction Page 6

ASSETS BY REGION IN US-DOLLAR, 2016–2018 ASSETS BY ASET CLASS 2018

Region 2016 share 2018 share

Certified ESG Analyst ® ESG – An Introduction Page 7

Certified ESG Analyst ® ESG – An Introduction Page 8

Source: unpri.org (2019), Morningstar 2020

Certified ESG Analyst ® ESG – An Introduction Page 9

The growth in ESG regulation Regional differences of ESG regulation

Number of RI-related policy instruments over time across the World’s

Source: UN PRI 2019, Carrots

Certified ESG Analyst ® ESG – An Introduction Page 10

CFA Institute Manual

Certified ESG Analyst ® ESG – An Introduction Page 11

Mainstreaming ESG – global milestones

2013 2014 2015 2016 2017 2018 2019 2020 …

Certified ESG Analyst ® ESG – An Introduction Page 12

Certified ESG Analyst ® ESG – An Introduction Page 13

Terminology and Definitions

Certified ESG Analyst ® ESG – An Introduction Page 14

• Socially Responsible Investment/Sustainable and Responsible Investment (SRI): “ethical investments,

Certified ESG Analyst ® ESG – An Introduction Page 15

• ESG: environmental, social and governance factors

Certified ESG Analyst ® ESG – An Introduction Page 16

Certified ESG Analyst ® ESG – An Introduction Page 17

Certified ESG Analyst ® ESG – An Introduction Page 18

• Common exclusion criteria:

Certified ESG Analyst ® ESG – An Introduction Page 19

Source: Government Pension Fund of

Certified ESG Analyst ® ESG – An Introduction Page 20

Best-in-class Example Arabesque S-Ray

Source: Arabesque S-Ray

Certified ESG Analyst ® ESG – An Introduction Page 21

Best-in-class – Example Zurich Cantonalbank approach for Large Caps

ENVIRONMENTAL SOCIAL GOVERNANCE

Certified ESG Analyst ® ESG – An Introduction Page 22

Best-in-class – Example Zurich Cantonalbank approach for Large Caps

PG NAM Consumer 74%

Avon NAM Consumer 69% Retailers

EMMA Church & Dwight NAM Consumer 27% others

Certified ESG Analyst ® ESG – An Introduction Page 23

Certified ESG Analyst ® ESG – An Introduction Page 24

Source: BNP Paribas

Certified ESG Analyst ® ESG – An Introduction Page 25

Certified ESG Analyst ® ESG – An Introduction Page 26

Certified ESG Analyst ® ESG – An Introduction Page 27

Current practises of US investors

Certified ESG Analyst ® ESG – An Introduction Page 28

• Strengthened role and obligation of shareholders through e.g.

Certified ESG Analyst ® ESG – An Introduction Page 29

• Strengthening shareholders’ rights and facilitating cross-border voting: shareholder identification,

Certified ESG Analyst ® ESG – An Introduction Page 30

• Engagement can be conducted on various intensity levels:

Certified ESG Analyst ® ESG – An Introduction Page 31