The Value of ESG: Building on a Strong Foundation


Key Takeaways

  • We believe ESG integration is the optimal approach to sustainable investing for value investors. It can offer increased portfolio diversification and maximizes the integration of both ESG-quality and alpha-related inputs.
  • With a historical focus on quality and downside risk protection, the Global Value Equity team has systematically incorporated extra-financial issues into its investment process. To strengthen our process we evolved to include third-party ESG data and proprietary ESG research.
  • Our team’s ESG views are risk based and forward looking. They are formed within the context of fundamental analysis to help determine if ESG issues present potential risks to a company’s valuation or quality profile.

The Value of ESG: Building on a Strong Foundation

When portfolio managers incorporate Environmental, Social and Governance (ESG) factors into an investment strategy, they consider those issues in conjunction with traditional financial analysis. When selecting investments, portfolio managers incorporate ESG factors into the portfolio's existing asset class, time horizon, and objectives. Therefore, ESG factors may limit the investment opportunities available, and the portfolio may perform differently than those that do not incorporate ESG factors. Portfolio managers have ultimate discretion in how ESG issues may impact a portfolio's holdings, and depending on their analysis, investment decisions may not be affected by ESG factors.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

American Century Investments is not responsible for and does not endorse any comments, content, advertising, products, advice, opinions, recommendations or other materials on or available directly or via hyperlinks to third party applications or websites. Logos or icons used are registered trademarks of their respective owners.

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.