The Growing Importance of Active ESG Management

As the trend towards sustainable investing¹ grows, investment products multiply, providing investors with a wide range of strategies to choose from. These products offer a variety of solutions to societal and environmental challenges and are available through both passive and active approaches – in other words whether the fund actively or passively manages environmental, social and governance (ESG) risks and opportunities.

The passive route has been a significant driving force behind growth in sustainable investment markets, probably since it has lower fees, it is scalable, easier to implement and to audit internally. However, at Carmignac, we believe active management is decisive to create value for our clients and to drive effective environmental and societal changes in the long run.

This paper, written by Justin Kew, ESG Analyst at Carmignac and endorsed via a foreword by Alex Edmans², studies the limitations of passive approaches to sustainable investing over active approaches.