- Engagement is seen as one of the keys for successfully implementing and executing an ESG strategy within a portfolio. It enables the portfolio manager to get in contact with the senior management of a company and to give them and their investors a voice via voting at shareholder meetings.
- ETFs are often criticised as failing at these important tasks, since they are passive instruments which follow an index and allocate their capital among all constituents of a benchmark index, regardless of their ESG profiles.
- Even when one is investing in companies that do meet given ESG criteria, it might turn out that some of the business lines of these companies could do better with regard to their ESG scores.
For further details see:
ESG Investing - Are ETFs Part Of The Solution Or The Problem?