INTEGRATING ESG INTO VALUATION MODELS AND INVESTMENT DECISIONS
THE VALUE DRIVER
Integrating ESG Factors in the Investment Process. This trend is likely to continue in the coming years because ESG integration in the mainstream investment process provides a clear opportunity to optimize the risk–return characteristics of your portfolio. From a practitioner’s perspective, one of the key challenges is how to integrate these factors in a company’s valuation, an interesting area that is still in development. Today, investors are still using several different ways of applying ESG factors in company valuations.
ESG has become one of the key directions for future investment analysis. Consideration of ESG factors are perceived as part of investment risk management. We can also see increasing demand from investors to pay attention to ESG related factors.
Even though ESG investment and ESG Integration has become a hot topic for discussion, asset managers are concerned about a lack of robust data could act as a barrier to greater adoption of ESG today. A lack of advanced analytics is also a significant concern for expansion of ESG Integration. Investment in ESG technology and specialist will be vital to ESG Investment.