PanAgora’s Environmental, Social and Governance (ESG) approach provides a blend of both Impact and Integration strategies.
PanAgora’s Global Equity ESG Impact offering combines unique and fundamental social, economic and investment insights with the latest statistical and machine learning techniques to create portfolios with a dual focus, to both generate above-benchmark alpha, and make an impact from an ESG perspective. We provide a fresh, systematic approach to the popular adage, “Doing well, while doing good.” The strategy is based on the following three pillars:
In addition, since our ESG factors are subject to the same rigorous evaluation process as any other alpha factors in our investment models, we incorporate these factors into a number of our alpha models, as appropriate, under the ESG Integration approach.
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A confluence of social and technological forces that has transpired over the past several decades has made considerations of business intangibles important for firm valuation. Furthermore, the relative importance of intangibles continues to increase, as shown by the figures below. Utilizing recently available data sources and advanced statistical and machine learning techniques, PanAgora has performed an in-depth study of the value of material Environmental, Social and Governance (ESG) data, and evaluated its impact on corporate returns from both financial and ESG perspectives.
Table 1: Intangibles are business assets that are not physical. Some examples of tangibles and intangibles are given below:
|Tangible Assets||Intangible Assets|
|Buildings||Intellectual Capitals (R&D, Patents, etc.)|
Figure 1: Investments in intangibles in the US have barely dropped during the Great Recession, and have increased since (chained values, 2007=100)
 Source: [RHJI, 2018]
Figure 2: Intangibles are becoming a bigger part of GDP
 Source: INTAN Invest, http://www.intan-invest.net/
Figure 3: Intangibles vs. Tangibles as Composition of Russell 1000 Market Cap
 Source: PanAgora
ESG Academic Advisory Panel and Partnerships