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Environmental, Social, and Governance Holistically: Don’t Overlook the “G”

Investors are increasingly looking to capture the unique aspects of incorporating ESG into their investment process. While much of the focus recently has been on the ”E”, BNP Paribas, in one recent example, has partnered with Solactive to create an index-tracking certificate based on the ISS ESG Governance QualityScore. The index combines sector controversy screening with high-governance quality, and overlays a low-volatility optimization for reduced risk. This is just one example of how asset managers can integrate Governance QualityScore in their portfolio selection process. Driving home that point, Solactive noted that “BNP Paribas’ involvement with ESG and their focus on G incentivizes companies’ governance behavior and motivates them to put more emphasis on maintaining a risk-management strategy .”

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