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Sustainability vs ESG: Avoiding the green bubble
Louis Larere, Portfolio Manager SRI, Zadig Asset Management (Partner with iM Global Partner since January 2020)
While market participants are increasingly acknowledging the importance of non-financial analysis for understanding and investing in companies, there is still confusion regarding the new lexicon. We believe that it’s important to be aware of the limitations of ratings and the wisdom of avoiding today’s expensively valued “green” stocks.
Our main focus is to differentiate environmental, social and corporate governance (ESG) integration from sustainable investing. We define ESG as a set of metrics that help us to understand a company’s non-financial performance across the acronym’s three dimensions, allowing us to rank the company against an industry or peer group. Notably, ESG factors are not here to help form an opinion on an industry’s impact on the world, but rather as a guide to how a company is improving