Responsible Investing

Cover
Half Title
Title
Copyright
Contents
List of figures
List of tables
About the authors
Contributors
Preface
Acknowledgments
Chapter rubrics
1 Introduction
	1.1 Assumptions for this textbook
	1.2 Terminology
	1.3 Useful features for students
	Discussion questions
2 A historical survey of ESG investing
	2.1 Progression of investing theories: neoclassical economics encounters human nature
	2.2 Socially responsible investing’s historical beginnings: religious and corporate development (1800s–1950s)
	2.3 Development era: key milestones in the development of SRI investing (1950s–1990s)
		Case study 2A Pilgrims Fund Board
	2.4 The modern era: 1990s–today
		Learning perspective 1 Handprinting: driving positive impacts
	Discussion questions
3 Common methods for incorporating ESG investments into portfolio management
	3.1 Exclusion-based ESG investing
	3.2 Integration-based ESG investing
		Case study 3A ESG integration at J.P. Morgan Asset Management
	3.3 Impact-based ESG investing
	3.4 Engagement-based ESG investing
		Case study 3B Defining engagement – Federated Hermes
		Learning perspective 2 ESG proxy voting
	Discussion questions
4 The development of ESG risk and the ESG rating system
	4.1 Introduction to ESG risks
	4.2 Policy risk
	4.3 Headline risk
	4.4 Performance risk
	4.5 Introduction to risk premia
	4.6 ESG identification and the ESG rating system
		Case study 4A MSCI ESG ratings
		Case study 4B Sustainalytics
	4.7 The impact of ESG risk on portfolio management
		Learning perspective 3 How ESG indexes facilitate the evolution of finance
	Discussion questions
5 Regulation, reporting, and taxonomy in ESG investing
	5.1 Necessity of precise responsible investing terminology
		Case study 5A Sustainable Development Goals
		Case study 5B Mexico SDG-linked bond
	5.2 Evolution of responsible investing terminology
	5.3 ESG-related regulation
		Case study 5C EU Sustainable Financial Disclosure Regulation
	5.4 Developments in ESG-related data and reporting
	Discussion questions
6 The impact of common investment theories on ESG investment trends
	6.1 Shareholder theory vs. stakeholder theory
		Case study 6A Dodge v. Ford Motor Co. (judicial foundation for shareholder theory)
	6.2 Material information vs. non-material information
		Case Study 6B Securities and Exchange Commission 17 CFR PARTS 211, 231 and 241 [release nos. 33–9106; 34–61469; FR-82] commission guidance regarding disclosure related to climate change
	6.3 Resource-based view vs. Porter’s five forces model
	6.4 Universal owner theory
	Discussion questions
7 The current role of ESG investing in portfolio management
	7.1 ESG investing in developed markets
		Case study 7A Breckinridge Capital Advisors
	7.2 ESG investing in emerging markets
		Case study 7B Hot topic: fossil fuel-free (FFF) investment
		Case study 7C SRI investing within hedge funds
	Discussion questions
8 Common investor concerns regarding ESG investment strategies
	8.1 Return concerns
		Case study 8A Passively customized ESG indices by Aperio (BlackRock)
	8.2 Policy concerns
	8.3 Information concerns
		Case study 8B Customized responsible investment policies to evaluate investment products – a case study from Germany
	8.4 Regional concerns
		Learning perspective 4 Sustainability and financial performance
	Discussion questions
9 Commonly held ESG views and practical considerations
	9.1 Qualitative vs. quantitative models
	9.2 Environmentally focused investing
	9.3 Socially focused investing
	9.4 Governance-focused investing
		Learning perspective 5 The future of capitalism is feminine
	Discussion questions
10 Methods for modeling risk and return for traditional investments
	10.1 Fundamental analysis
		Case study 10A Integrating ESG in DCF valuation: AllianceBernstein’s Global Core Equity
	10.2 Quantitative analysis
	10.3 Development of common method of risk and return
	Discussion questions
Index