Abstract

The number of equity funds claiming to be sustainable continues to grow, as well as the regulatory transparency requirements they face. Despite this trend, sustainable finance is facing a double “identity crisis”: on the one hand, civil society is increasingly denouncing financial greenwashing and questioning the real impact of sustainable finance, and on the other hand, practitioners are divided on the (double) materiality definition and the most effective levers needed to make an extra-financial impact. This article aims to assist institutional asset owners faced with these questions as they try to build a sustainable portfolio, whether indexed or active. Based on a review of the academic literature, we highlight that the main building blocks that investors ought to consider – themes, levers (exclusions, allocation, engagement) and data – are interdependent. We then propose a classification of sustainable investments, as well as different levels of ambition in terms of extra-financial impact, that lead to four families of coherent sustainable investment strategies that combine themes, levers and data in a consistent way.

Key takeaways:

• While the lack of standardisation in sustainable investing is often perceived as a challenge for investors, in reality, practitioners and academic research have identified sound building blocks that should underpin any sustainable investment strategy.
• Each building block (ESG themes, implementation levers, data) offers multiple choices and no silver bullet: it is the consistent combination of these building blocks that creates a coherent investment strategy.
• Investors can effectively monitor the impact of their investment actions by focusing on the aspects that they can control, namely observable and measurable outputs, rather than outcomes that depend on too many stakeholders to be subject to accountability.

Authors

Vincent Bouchet
Director of ESG & Climate research,
Scientific Portfolio

Shahyar Safaee
Deputy CEO and Business Development Director,
Scientific Portfolio

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https://scientificportfolio.com/wp-content/uploads/2025/09/Climate-Equity-Performance-Needs-Close-Attention.pdf

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