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The Science of Climate Change

Climate change is no longer a distant threat or just a possibility, it is now a reality for all of us. In this pathway, Kevin Trenberth, a renowned climatologist, delves into the science behind climate change. He first introduces the climate system, its main components and forces.

Tackling the Plastic Crisis

Plastic pollution is by far the biggest threat to our oceans and this remains an incredibly tough problem to solve. Plastic credits could potentially serve as one of the much needed solutions for this crisis.

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The Scale of the Net Zero Challenge

The price of meeting net zero is estimated to be between $100-150 trillion over the next 30 years. Regardless of this cost, we need to reach net zero before climate change does irreversible damage to the environment and the economy.

ESG, Sustainability and Impact Jargon Buster

ESG, sustainability, impact… they all just mean green, right? Not quite. Despite being used often interchangeably, there are distinct differences between these terms.

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Featured Pathways

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The Science of Climate Change

Climate change is no longer a distant threat or just a possibility, it is now a reality for all of us. In this pathway, Kevin Trenberth, a renowned climatologist, delves into the science behind climate change. He first introduces the climate system, its main components and forces.

Tackling the Plastic Crisis

Plastic pollution is by far the biggest threat to our oceans and this remains an incredibly tough problem to solve. Plastic credits could potentially serve as one of the much needed solutions for this crisis.

More pathways

Book a demo

Ready to get started?

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Sustainability Unlocked to your current platform

Featured Content

More featured content

The Scale of the Net Zero Challenge

The price of meeting net zero is estimated to be between $100-150 trillion over the next 30 years. Regardless of this cost, we need to reach net zero before climate change does irreversible damage to the environment and the economy.

ESG, Sustainability and Impact Jargon Buster

ESG, sustainability, impact… they all just mean green, right? Not quite. Despite being used often interchangeably, there are distinct differences between these terms.

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Book a demo

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Book a demo

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Embedding ESG Data into the Investment Process

Embedding ESG Data into the Investment Process

Arun Kelshiker

20 years: Asset management and stewardship

In this video, Arun explores how ESG data is integrated across the investment process from research and valuation to portfolio construction and risk management. He explains key frameworks like the UN PRI, highlights real-world examples from firms like Manulife and Invesco, and discusses the tools and metrics investors use. He also addresses the challenges around ESG data transparency and ratings consistency, offering insights into how investors can navigate these issues to make smarter, more sustainable decisions.

In this video, Arun explores how ESG data is integrated across the investment process from research and valuation to portfolio construction and risk management. He explains key frameworks like the UN PRI, highlights real-world examples from firms like Manulife and Invesco, and discusses the tools and metrics investors use. He also addresses the challenges around ESG data transparency and ratings consistency, offering insights into how investors can navigate these issues to make smarter, more sustainable decisions.

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Embedding ESG Data into the Investment Process

14 mins 12 secs

Key learning objectives:

  • Understand how ESG data integrates into investment processes across equities and fixed-income strategies

  • Outline methodologies and tools used by investors and data providers for ESG integration

  • Identify challenges related to ESG data, such as transparency, methodological biases, and reliability

Overview:

The integration of ESG data has transformed sustainable investing, driven by frameworks like the UN PRI and methodologies from ESG providers such as MSCI and Sustainalytics. ESG data informs every stage of investment, from research and security valuation to portfolio construction and risk management. Case studies from Manulife, RBC, and Invesco highlight innovative approaches to incorporating ESG metrics into equity and credit strategies. Challenges persist, including rating transparency and biases, but ESG data helps investors assess risks, align portfolios with sustainability goals, and enhance returns. By embedding ESG analysis into processes, investors can better navigate the complexities of sustainable finance.

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Summary
What is the UN PRI’s framework for ESG data integration?

The UN Principles for Responsible Investment (PRI) outlines a five-part ESG integration process: responsible investment policy, governance, investment process, stewardship, and monitoring/reporting. The PRI, alongside the CFA ESG Framework, emphasises ESG research, security valuation, and portfolio-level integration. These elements ensure that ESG considerations are incorporated holistically, addressing risks and opportunities while aligning with sustainability goals.

How do ESG frameworks inform research, security valuation, and portfolio construction?

ESG research includes materiality frameworks, SWOT analysis, and monitoring tools, informing equity and fixed-income valuations through scenario analysis and risk assessments. Portfolio-level integration involves aligning ESG profiles with benchmarks, strategic/tactical asset allocation, risk management, and stress-testing. These frameworks ensure investments reflect sustainability values while managing risks and maximizing returns.

How is ESG data embedded into portfolio-level risk management and analysis?

Investors utilise ESG data to assess portfolio risks via exposure metrics like Weighted Average Carbon Intensity (WACI) and controversy scores. Tools aggregate ESG datasets to build consensus rankings, enabling stress-testing and scenario analysis. This macro-to-micro approach helps quantify risks, align portfolios with sustainability benchmarks, and anticipate shocks.

What challenges exist in ESG data transparency and consistency?

Challenges include methodological biases, low correlation among ESG ratings (average correlation ~0.6 compared to ~0.9 for credit ratings), and reliance on dominant providers. Divergences in scope, measurement, and weighting complicate accurate assessments. Despite these issues, evolving tools and frameworks continue to improve the reliability of ESG data for investors.

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Arun Kelshiker

Arun Kelshiker

Arun Kelshiker was formerly the Head of Asset Allocation and Portfolio Strategy at Standard Chartered Bank and part of the bank's Global Investment Committee, where he provided investment advisory and multi-asset portfolio solutions. His focus is now with Cambridge Sustainable Investment Partners, which draws its expertise from the Resilience and Sustainable Development Centre at Cambridge University. He is also a university lecturer at the Frankfurt School of Finance and Management and is Vice Chair of the CFA UK's Inclusion and Diversity Committee and its Investment Committee.

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