Now that we’ve established the broad sweep of ESG’s domain as well as the challenges of reporting and disclosure, let’s take a look at how it gets implemented across various asset classes.

Traditionally ESG resided in public equities given shareholder’s theoretical ability to change corporate behavior. As we saw in our earlier study of the history, leverage could be applied as incentive to adopt sustainability programs or diversity measures. But soon it became apparent that more sophisticated tools would be needed to track ESG compliance and opportunities.

So-called ESG integration describes the process whereby investors incorporate all aspects of environmental, social and governance elements in their risk analysis of a business or manager. Every investor has developed their own framework to measure quality against a spectrum of elements. Critical to this evaluation is whether data can be validated by third-party research.