One path to ESG proficiency for investors - what other paths would you recommend

ESG investing is part of a broader mega trend that has the starting of a cultural revolution which is too big to be ignored.

A simple 5 step checklist I found useful for embracing ESG investing. What you think?

1. Foundation: jargon can be a barrier 

- I found the CFA ESG CERTIFICATE a comprehensive yet not overly detailed course ( the recommended 130hrs is generous to understand and pass)

2. Embrace the new data, with caveat that effective filtering is essential given the explosion in available data. Partnership's are key

Bespoke DIY

- Bloomberg BQNT have interesting tools for both bottom up and top down analysis in this space

A few highlights below ... happy to share what I find particularly useful - just ping me

{BQNT} is the perfect tool to analyze Bloomberg ESG data including many recently released dataset. 

Best bit is you can use the demos as a base and customize from there.

Some really good examples too within ESG bond analysis. Worth taking a dive in.

Fintech Partnerships

Personally I find both Bluefire Ai and Ravenpack offer cutting edge and practical ML applications worth looking into - especially in the ESG space.

For Blue Fire, the business explains that artificial intelligence means building a complex structure of algorithms that can manipulate data and information into automated actions. The objective of AI is not to replace human-produced activity but to augment it to reap time-saving and efficiency benefits, and to supercharge the risk management and the analyst functions.

“We’re not replacing the process but we augment it. For example, when looking through a selection of 2,000 investible companies, through the use of AI we can now cover those 2,000 companies with the same fidelity that there would be in covering a smaller universe. With AI, the analysts can cover a lot more companies,” CEO Waddington says.

Ravenpack offer a number of services, but the ESG service I have looked in is mainly News sentiment data. Focusing on what can help generate additional alpha and mitigate downside risk in ESG investing. Explore the specific, observable, and repeating pattern that follows negative ESG news traders can use to develop medium-term alpha-generating trading strategies.

There’s a big movement from an information industry into an intelligence industry. At the moment there are a lot of information providers in the market. But there’s a start of a new intelligence industry when machines are augmenting the process by curating and distilling this information. Portfolio managers and other investors should look to embrace this evolution I feel.

3. Focus to find value. Work with the specialists

The ESG space is so large and growing I feel the best value is found with focus.

Personally I are see clear value in Asia & have my focus there, but I appreciate their is pockets of value across the space.

Why I see value in Asian ESG solutions for 3 simple reasons:

i) Asia's growth dominance in mega cities drives the need for sustainable solutions more urgently than anywhere else. Extreme weather events, failure of climate change adaptation and natural catastrophes are among the top 10 risks for business leaders in East Asia and the Pacific. (Growing Demand)

ii) Worlds middle class is shifting East, alongside ideas of sustainable future (growing demand)

iii) Asia has lagged peers to date in the ESG space, but that is changing (opportunity)

Both policy and market participation shifting Green

Europe, home to the world's largest green bond market, will likely lead global issuance to another record this year, while the climate-friendly administration in the U.S. and more Asian countries joining the race to zero emissions will give the market another boost.

Personally I find Firms like Nomura and Aberdeen offer interesting focused insight into Asia ESG - worth following.

What you think?

4. Maintain a healthy level of skepticism as asset class matures - but don’t ignore. A few interesting related articles below

Overselling Sustainability Reporting

The Challenge of Rating ESG Performance

The Changing Role of the Investor Relations Officer

Please share if you have other interesting ones

5. Stay passionate about subject as it’s important 

I really recommend you read the Patagonia Brand’s inspirational and humorous story of creating a sustainable and profitable businesses. Inspiring journey that shows a reael sustainable solution.

Great book

Thoughts comments welcome. As I started with this is not a definitive guide but one path I found interesting.

Love to hear your thoughts