Hills Sustainability
THEME: SUSTAINABILITY
1 July 2024 Financial Analysts Journal Volume 80, Issue 3

ESG and Derivatives

  1. Rajkumar Janardanan
  2. Xiao Qiao
  3. K. Geert Rouwenhorst
Like stocks and bonds, derivatives investments have a measurable ESG impact. The paper provides a rationale and a simple framework for applying ESG screens to portfolios that include derivatives.
Read the Complete Article in the Financial Analysts Journal CFA Institute Member Content

Abstract

Like stocks and bonds, derivatives investments have a measurable environmental, social, and governance (ESG) impact. This paper provides a rationale and a simple framework for applying ESG screens to portfolios that include derivatives, with a particular application to commodity futures. Commodities are ranked based on their top-down ESG scores, and we evaluate the impact of two hypothetical ESG screens for a diversified commodity futures portfolio.

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