What does it mean for an investment strategy to be 'thematic' in relation to ESG?

An investment strategy described as 'thematic' in relation to ESG (Environmental, Social, and Governance) focuses on targeting specific sustainability outcomes or issues. This thematic approach aligns investments with particular themes that reflect societal challenges or opportunities, such as climate change, renewable energy, sustainable agriculture, or social equity issues. By concentrating on these themes, investors seek to generate positive environmental or social impacts alongside financial returns.

This strategy allows investors to align their investments with their values and address specific concerns, providing a clear framework for making investment decisions. Thematic investing in ESG is about creating a positive impact while also potentially achieving attractive financial performance. It emphasizes the importance of understanding and engaging with the broader contexts that influence investment performance rather than merely focusing on financial metrics.