“Typically ESG data is collected from publicly available report and accounts, which of course works well for quoted equity-based indices and investors,” he said.
“However, many bond issuers are unlisted, and as a result around one third of our funds’ holdings relate to issuers that are not represented in ESG databases, which requires us to carry out our own ESG research on these names.”
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This is not to say passives are an inappropriate way to access all non-mainstream assets with an ESG approach.
But like other investors, those with an ESG bias should consider a variety of factors when setting the balance of active and passive fund holdings.
Dave Baxter is deputy personal finance editor of Investors Chronicle
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