Style name: ESG Plus

Investment options which significantly integrate environmental, social and governance issues into their investment research (to improve risk management), alongside other characteristics

Brief description of Style

ESG is increasingly used across the board by investment managers to improve risk management with the aim of improving investment performance. We classify funds as ‘ESG Plus’ if they carry out significant research into environmental, social and governance issues – and also have other strategies that indicate the fund is clearly intended for clients with an interest in sustainability.

The assets these funds hold are typically good at ESG risk management (ie the company manages those risks well), however these funds invest widely. Unless a fund in this group as screens that indicate it excludes certain areas the fund will be likely to invest in any type of company – including polluting and controversial ones (provided they manage ESG risks well).

Many of these funds are focused on encouraging positive change through active responsible ownership strategies, so whilst these funds may invest in controversial assets and should not be confused with themed or focused sustainable or ethical funds, they may help deliver positive change by working to influence sustainability laggards.

SRI approach applied

ESG strategies involve fund managers carrying out additional research that helps them to understand and manage ESG related investment risks and opportunities better. The funds therefore tend to invest in companies that are regarded as being lower risk, from an ESG perspective.

This research may or may not significantly impact investment selection. (Companies in any sector can ‘manage ESG risk’ well – or better than their peers.)

So, unless stated otherwise ‘ESG’ does not imply a specific commitment to avoid or support particular types of companies or corporate behaviours – its focus is commonly simply to ‘understand and assess’ risk and make better informed decisions).

These strategies often include significant responsible ownership activity – where fund managers are encouraging companies to have higher sustainability standards eg meet net zero targets.

SRI Issues

This strategy involves focusing on environmental, social and governance related risks that may impact investment returns, particularly over the longer term. Significant emphasis is often put on ‘governance’ – ie company management processes.

Variation across Style segment

Approaches vary. Some funds in this group are very similar to sustainable and ethical funds, others are relatively ‘light touch’. Some may, for example invest in oil companies – others would not. Some of these funds focus very heavily on encouraging the transition to higher sustainability standards through responsible ownership strategies. See additional filters for further information.

Impact on investment strategy

Taken as a stand alone strategy ‘ESG’ does not necessarily significantly impact investment decision making. Investment variations are more likely to come from exclusion criteria.

Who is this Style most likely to appeal to?

People who are keen to ensure environmental, social and/or corporate governance related issues are understood and ‘considered’ by fund managers – but are not necessarily focused on. Funds in this group that have strong responsible ownership strategies may also appeal to clients who want to encourage companies to improve.

Associated Styles

Most similar to ‘Sustainability Tilted’ funds, which also tend to invest very widely (may include controversial sectors) and rely heavily on responsible ownership.

Associated terms

ESG = Improved risk management, enhanced investment analysis


Most asset managers do ESG research today – these funds focus more heavily on it – and are marketed as being ESG funds, often with screens and/or responsible ownership strategies.