Sustainable Development Goals: A Liquid Approach to Impact Investing
Jun 27, 2024
Despite the challenges facing impact investing, PGIM Quantitative Solutions believe that asset owners have an opportunity to go further with their investment ambitions. Here, they introduce an improved approach for investing with impact.
How can investors uncover companies that make a positive impact and also provide a compelling return profile?
By following the market.
PGIM Quantitative Solutions presents research which shows that:
- Changing consumer preferences and demand are driving companies to provide more impactful and responsible products and services.
- Asset owners, in turn, are increasingly seeking investments that intersect upside returns and sustainability.
- Complex problems require multi-dimensional solutions that not only target companies with alignment to sustainable development goals, but also those with strong ESG and fundamental attributes, while balancing risk considerations.
- This tradeoff between risk and sustainability necessitates a sophisticated data approach and advanced portfolio engineering.
Historically, measuring the impact of public companies has been challenging due to the lack of reported data. To make matters worse, certain companies employ deceptive marketing practices to mislead investors into believing their products, services, and policies are in line with ESG values. These are the very reasons that some asset owners have begun to view ESG as only part of the solution for investing with impact, and why PGIM Quantitative Solutions has devoted several years to building a complete, transparent, and effective ESG model.
Despite the challenges facing impact investing, they believe that asset owners have an opportunity to go further with their investment ambitions, by broadening their investment goals from risks and returns to approaches that truly help address the increasing social and environmental challenges facing the world.
Here, the team introduce an improved approach for investing with impact in global equities markets. Read on to view the full paper.
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