ESG analysis evaluates a company's environmental, social, and governance practices and results. When focused on issues that are relevant to a particular business or security type, it has potential to add to overall investment insight and to improve decision making.
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Environmental criteria include a company's or issuer's carbon intensity and use of resources like water or minerals. Strategic focus in this area might include a company's plans to reduce waste, increase recycling, raise the proportion of energy supply from renewable sources, or improve product design to be less resource intensive.
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Social criteria include labor practices and supply chain management, for example. Strategic focus in this area might include programs to improve employee well-being, commitment to workplace equality and diversity, or improved stewardship of supplier relationships and working conditions.
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Governance criteria include board composition and executive compensation, as well as bondholders' rights. Strategic focus in this area might include improvements in board independence or diversity, or alignment of management incentives with the company's or issuer's strategic ESG objectives.
What are your ESG preferences?
Use our questionnaire to help assess your preferences for ESG investment strategies.
Frequently Asked Questions | ESG Investing
What is Putnam’s approach to ESG integration in investment research?
We integrate financially material ESG considerations in our research across asset classes, noting that investment-relevant issues vary by sector, geography, asset class, and issuer context. Research that is tailored to these different settings has potential to add meaningful value.
How does Putnam communicate with companies about ESG issues?
We believe that active managers have a particular role to play in engaging with company management teams, since our fundamental research process involves regular dialogue regarding corporate strategy and execution. As part of our investment process, engagement with companies and issuers spans a wide range of topics, including long-term strategy, capital allocation, and financially material ESG issues. We describe our efforts in our Engagement and Stewardship Report.
How do Putnam’s sustainable and ESG investing themes relate to a sustainable economy?
We believe a sustainable global economy is essential to the creation of long-term value. In addition to consideration of material ESG issues within the research process, Putnam’s Sustainable Equity team focuses on themes that support a Thriving World.
What is Putnam’s ESG philosophy?
We believe that certain ESG issues are relevant and material to long-term business fundamentals and security values, and important to all investors. Our sustainable investing strategies aim to provide long-term value through investment analysis and portfolio construction.