The Value of ESG: Building on a Strong Foundation


Key Takeaways

  • We believe ESG integration is the optimal approach to sustainable investing for value investors. We think it can offer increased portfolio diversification and maximizes the integration of both ESG-quality and alpha-related inputs.
  • With a historical focus on quality and downside risk mitigation, the Global Value Equity team has systematically incorporated extra-financial issues into its investment process. To strengthen our process we evolved to include third-party ESG data and proprietary ESG research.
  • Our team’s ESG views are risk based and forward looking. They are formed within the context of fundamental analysis to help determine if ESG issues present potential risks to a company’s valuation or quality profile.

The Value of ESG: Building on a Strong Foundation

A strategy or emphasis on environmental, social and governance factors ("ESG") may limit the investment opportunities available to a portfolio. Therefore, the portfolio may underperform or perform differently than other portfolios that do not have an ESG investment focus. A portfolio's ESG investment focus may also result in the portfolio investing in securities or industry sectors that perform differently or maintain a different risk profile than the market generally or compared to underlying holdings that are not screened for ESG standards.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

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The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.