The ESG training materials focus on the concept of ESG integration. I need to define my definition of ESG integration to avoid misunderstanding from your firm and audience. The industry professionals have different versions of meaning when they talk about ESG integration. For instance, the model by Fidelity (as shown in figure below) places ESG integration as one category of active ownership and the spectrum includes 5 different categories starting from “ESG aware” as the lowest level to “thematic” as the highest level of ESG involvement. However, the model by CFA/PRI defines the concept of ESG integration as an investment framework which does not specify the magnitude of involvement (see figure below). I tend to follow the CFA/PRI approach and define ESG integration as the inclusion of all 5 categories of active ownership depicted in the Fidelity model. It does not matter what is the level of ESG involvement. As long as the investment approach takes into consideration of ESG in an active manner using a positive scoring approach through an inclusion model (therefore, exclusion approach such as SRI should not be counted), then I will define such an approach as ESG integration.

ESG Integration Spectrum (Copyright by Louis Cheng)