Sustainable investing - Best in class | Robeco Global (2024)

FAQs

What is best in class ESG investment? ›

An investor who follows the best-in-class principle does not necessarily exclude more controversial sectors or industries such as thermal coal or alcohol. Instead, they invest in the companies that make the most effort to meet the ESG criteria that are relevant for their respective industries.

Best-in-Class is an approach in which a company's or issuer's environmental, social and governance (ESG) performance is compared with the ESG performance of its peers (i.e. of the same sector or category) based on a sustainability rating.

The best-in-class approach for sustainable investing means finding the companies that are leaders in their sector in terms of meeting environmental, social and governance (ESG) criteria.

Best in class (ESG) investment refers to the composition of portfolios by the active selection of only those companies that meet a defined ranking hurdle established by environmental, social and governance criteria. Typically, companies are scored on a variety of criteria.

Similar to tilting, best in class allows investment across a range of industries, even carbon intensive ones. But it picks a portfolio of companies that lead their sector in terms of their ESG credentials.

If you're a financial advisor, asset manager or work in risk analysis, getting ESG certified could benefit your career. It's beneficial for those looking to specialise in sustainable investing or want to show clients they know about socially responsible investment options.

Best-in-class refers to the best hardware or software within a given category or class based on factors like performance, features, capabilities, value, or a combination of these attributes. Typically, a best-in-class solution offers the best overall cost-benefit ratio compared to other alternatives in its category.

The concept of sustainable development is named after the Brundtland report, which reported sustainable consumption in developed countries. Sustainable development is based on three fundamental pillars: social, economic and environmental.

Environmental, social, and corporate governance (ESG) investing focuses on companies that support environmental protection, social justice, and ethical management practices.

ESG Investing

ESG stands for 'environmental, social, and governance' - the three fundamental pillars of this type of investing. The term encompasses various approaches whereby ESG considerations are prioritised, meaning this can cover 'sustainable investing', 'socially responsible investing', or 'impact investing'.

Which ESG framework is the best? ›

Best-in-class screening is the process of investing in sectors or companies based on their positive environmental, social, and governance performance compared to their industry peers.

The U.S. stock market is considered to offer the highest investment returns over time. Higher returns, however, come with higher risk. Stock prices typically are more volatile than bond prices.

Positive screening, or as it is sometimes referred to, 'best-in-class screening', is a process that identifies companies that are actively making contributions to social or environmental change. This enables investors to screen for and support practices that they find impactful.

Best-in-class screening is the process of investing in sectors or companies based on their positive environmental, social, and governance performance compared to their industry peers.