PanAgora Environmental, Social and Governance (ESG) Strategies is an ESG Impact approach that utilize unique and fundamental social, economic, and investment insights combined with the latest statistical and machine learning techniques to create 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 (IMM) that maximizes the efficacy of ESG alpha factors
Custom designed portfolio taking into asset owner’s view on which ESG metric matters, and how much does it matter vis-à-vis alpha return
In addition, since our ESG alpha factors are alpha factors that are subject to the same rigorous evaluation process as any other alpha factors in our investment model, they are incorporated into our alpha models as appropriate, under the ESG Integration approach.
PanAgora Global Equity ESG Portfolios (ESG Impact)
A confluence of social and technological forces over the past several decades have 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 made in-depth studies of value of material Environmental, Social and Governance (ESG) data, and evaluated their impact on corporate returns from both financial and social/environmental perspectives.
Table 1: Intangibles are business assets that not physical. Some examples of tangibles and intangibles are given below:
Intellectual Capitals (R&D, Patents, etc.)
Figure 1: Investments in intangibles in the US has barely dropped during the Great Recession, and has increased since (chained values, 2007=100)
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