A Framework for Environmental Social and Governance Considerations in Portfolio Design

It is often argued that the world is changing and that the impact of Environmental , Socia l and Governance (ESG) issues could pose a significant risk or potential opportunity for pension assets. While this argument may well have merit, it rarely leads to actionable steps or c lar i ty o f d i rect ion. In some sense i t i s a ca l l to arms aga ins t an unknown enemy. The inherent breadth and ambiguity of issues has resulted in the integration of ESG considerations into portfolio design remaining largely a philosophical push without clarity on the direct and indirect impacts on shareholder value.