The Big Idea
ESG research is backward looking in nature. In the absence of forecasting elements, any seasoned analysts that use the same robust research process and source all the publicly available information should derive similar findings and conclusions.
The Deep Dive
ESG investing is for the long term and hence ESG research may not be for immediate trading. It may be used to generate ideas for voting and stewardship activities. To have quality ideas for engagement, sector specialization helps to asset owners and managers to have quality conservations with company management.
Beginning of Standardizations
The European Union is starting with E for ESG standardization in its Taxonomy Regulation. A lot of work has been done on the environmental impact of farming, forestry, and fast fashion, etc, but not much about specialty chemicals as the bloodstream of deep tech, such as battery and semiconductor. Given the importance of chemical games in sustainability indexes, sector-specialized research on E is essential to identify and quantify the sustainability risks.
Return to the Basics
Getting the the basics right provides clarity The knowledge of technology, pricing and cost structure helps in the understanding of the environmental footprint in the manufacturing process and the circular economy (often the lack of it). In real life, recycling happens only when it is technologically and economically viable.