An analyst derives correlations to determine how ESG factors might impact financial performance over time and then weights those factors appropriately within the portfolio. This approach is best described as:
The systematic approach involves deriving correlations between ESG factors and financial performance, then weighting those factors accordingly within the portfolio. This method is quantitative and aims to integrate ESG factors into the overall risk and return analysis.ESG Reference: Chapter 7, Page 325 - ESG Analysis, Valuation & Integration in the ESG textbook.
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