Investment implications

• Measurement and analytics of ESG criteria are still in an early stage and require a custom approach.
• Material ESG metrics that have not been fully "priced in" may provide investment opportunities across asset classes — regardless of how strongly an investor embraces ESG principles — and should be integrated into the security selection process.
• Investors can move beyond formulaic, check-the-box ESG rating methodologies and take more active approaches that allow for analyst discretion or can be discerning in recognizing which ESG factors are material for a specific firm or industry.
• Investors should re-evaluate exclusionary approaches, which — while unambiguous — limit ESG-aware investors' ability to influence company policies through direct engagement.