ESG Comes to Town
By Kartik Ghia, Ph.D., Co-Head of the Systematic Strategies Team, Index and ESG Research Group, Bloomberg LP and Member of both the JPMCC’s Advisory Council and the GCARD’s Editorial Advisory Board; A.J. Lindeman, Ph.D., Head of the Index and ESG Research Group, Bloomberg LP; and Michael Zhang, CFA, Quantitative Analyst, Index and ESG Research Group, Bloomberg LP
In recent years, environmental, social and governance (ESG) themes have rapidly risen to prominence within equities and fixed income. In commodities however, this discussion is still in its infancy. In this article, the authors (a) highlight the unique interpretation issues for commodities investors with regard to ESG investing; (b) provide a summary of the factors that need to be considered when estimating GHG emissions for metals production; (c) outline a rules-based approach for estimating GHG emissions per metal; and (d) construct sample portfolios incorporating GHG-based scores.
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