What ESG feature is often overlooked in screening approaches for collective investment funds?

The focus on stewardship as a critical ESG feature is essential, especially in the context of collective investment funds. Stewardship refers to the active management and engagement practices that investors apply to ensure that the companies in which they invest adhere to ESG principles. It encompasses practices such as voting at shareholder meetings, engaging in dialogue with company management, and advocating for transparency and accountability regarding ESG issues.

In many screening approaches, particularly negative screening strategies, investors often prioritize eliminating companies or sectors based on unsatisfactory ESG performance or practices. This can lead to a diminished focus on how active engagement and stewardship can effectively drive change within companies and improve their ESG practices. By overlooking stewardship, investors may miss opportunities to influence corporate behavior positively and enhance the long-term sustainability of their investments.

Other features, such as negative screening or positive-weighted ESG portfolio scores, might be more commonly highlighted in discussions around screening methodologies. However, the nuanced understanding of how stewardship can enhance the overall impact of ESG investing is frequently underestimated in investment decision-making processes.