Key Takeaways
We believe ESG integration is the optimal approach to sustainable investing for value investors. We think it can offer increased portfolio diversification and maximizes the integration of both ESG-quality and alpha-related inputs.
With a historical focus on quality and downside risk mitigation, the Global Value Equity team has systematically incorporated extra-financial issues into its investment process. To strengthen our process we evolved to include third-party ESG data and proprietary ESG research.
Our team’s ESG views are risk based and forward looking. They are formed within the context of fundamental analysis to help determine if ESG issues present potential risks to a company’s valuation or quality profile.
Authors
The Value of ESG: Building on a Strong Foundation
Many of American Century's investment strategies incorporate the consideration of environmental, social, and/or governance (ESG) factors into their investment processes in addition to traditional financial analysis. However, when doing so, the portfolio managers may not consider ESG factors with respect to every investment decision and, even when such factors are considered, they may conclude that other attributes of an investment outweigh ESG considerations when making decisions for the portfolio. The consideration of ESG factors may limit the investment opportunities available to a portfolio, and the portfolio may perform differently than those that do not incorporate ESG considerations. ESG data used by the portfolio managers often lacks standardization, consistency, and transparency, and for certain companies such data may not be available, complete, or accurate.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.