ESG Continues to Evolve

Bringing Fundamental Analysis to ESG Investing

Key Takeaways

ESG Investing Continues to Gain Momentum in Investment Management

However, differing nomenclature, divergence on ESG rating methodologies, and a lack of standardized disclosure standards remain sources of disagreement among ESG specialists, regulators, and investors.

Amid the Variety of Approaches to ESG Investing, ESG Integration Can Enhance Diversification and Alpha Generation

We remain focused on delivering ESG solutions that meet our clients' evolving needs. When investors seek our advice, we recommend ESG integration. This approach helps increase portfolio diversification and maximizes the integration of both ESG quality and alpha-related inputs.

ESG Factors Can Be an Important Input Into a Fundamental Research Process, but May Not Be a Determining Driver of Alpha

While correlation between ESG and quality and volatility factors exists, extending this relationship to investment performance is subject to debate and warrants an equal balance between collateral ESG considerations and investment returns.

Introduction

The ownership structure of American Century Investments® is unique in the asset management industry. With over 40% of dividends distributed to the Stowers Institute for Medical Research, we enable our clients to directly support lifesaving research and contribute to the global fight against cancer. With responsible investing firmly rooted in our DNA, American Century’s focus on ESG (Environment, Social, and Governance) factors is integral to our corporate citizenship and business model.

In 2017, American Century developed a proprietary framework aimed at supporting ESG-focused investment solutions across our investment complex. In this Q&A, Bernard Chua asks Guillaume Mascotto about the current fluidity around ESG, relationship between ESG and investment performance, and American Century’s definition of ESG and view on the most optimal approach to ESG investing.

Guillaume Mascotto

Guillaume Mascotto

Vice President, ESG and Investment Stewardship

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ESG Continues to Evolve: Bringing Fundamental Analysis to ESG Investing

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This information is for educational purposes only and is not intended as investment advice.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

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