Environmental, social, and governance factors as a part of the investment strategy

Barysheva Aleksandra Evgenevna

The paper provides an overview of methods for integrating environmental, social, and corporate governance (ESG) factors into the modern portfolio theory. According to the Global Alliance for Sustainable Investment (Global Sustainable Investment Alliance), the inclusion of ESG factors in the investment portfolio is the second most popular alternative investment strategy since 2018 [11, p. 10]. In the paper, we consider the main principles of ESG integration into an investment strategy, methods of obtaining ESG data, and show how to include ESG factors into the classic optimal Markowitz portfolio.

Keywords:Markowitz portfolio, environmental, social and governance factors, ESG, portfolio investment, alternative investment strategies.