PanAgora > Insights > Integrated Alpha: The Future of ESG Investing

Integrated Alpha: The Future of ESG Investing

The rise of AUM in ESG investment has been striking over the past decade. However, since ESG is inherently individual value based, there has been a variety of ESG investment approaches, each appealing to a different segment of ESG investors. In this paper, PanAgora put forth a framework that unifies the currently popular approaches to create ESG portfolios that generate both above benchmark alpha and measurable, beneficial social or environmental impact.   The strategy is based on the following three pillars:

  • Proprietary ESG alpha factors that generate both positive alpha return and social or environmental impact
  • Proprietary Investment Materiality Metrics that maximizes the efficacy of ESG alpha factors
  • Custom designed portfolio taking into account which ESG metric matters, and how much does it matter vis-à-vis alpha return