MAC 301
SUSTAINABILITY AND
STRATEGIC AUDIT
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MAC 301– MODULE 6
INTEGRATED
MANAGEMENT FOR
CAPITAL MARKETS AND
STRATEGY: VALUE VS
VALUES
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TOPIC OUTLINE:
• Define Smart Beta and Factor Investing
• Differentiate Sustainability Investment Methods
• Enumerate the Impact and Challenges of Integrated
Reporting
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INVESTMENT
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INVESTMENT
It is the allocation of resources —
typically money — with the
expectation of generating future
returns or profit.
This process involves committing
funds to various assets such as
stocks, bonds, real estate, or
business ventures, with the
expectation that these assets will
grow in value or produce income
over time.
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SUSTAINABLE INVESTMENT
It is the practice of
investing in companies,
projects, or assets that
not only aim for
financial returns but also
consider environmental,
social, and governance
(ESG) factors.
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SUSTAINABLE INVESTMENT
Supporting Meeting external Improving overall risk
companies with sustainability management and
sustainable business regulations and financial
practices. internal policies. performance.
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SUSTAINABLE INVESTMENT
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ENVIRONMENTAL, SOCIAL
AND GOVERNANCE (ESG)
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ENVIRONMENTAL, SOCIAL
AND GOVERNANCE (ESG)
ENVIRONMENTAL SOCIAL GOVERNANCE
How a company
manages relationships
How a company How a company is
with employees,
impacts the planet governed
suppliers, customers,
and communities.
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WHY ESG FACTORS MATTER IN INVESTING?
Good Governance Improves Financial Performance
Environmental and Social Responsibility Can Reduce Risk
Reputation and Business Success Are Linked
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MEASURING ESG IMPACT ON INVESTMENTS
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INVESTMENT
STRATEGIES
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INVESTMENT STRATEGIES
ACTIVE PASSIVE
INVESTING INVESTING
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SMART BETA INVESTING
It combines the
advantages of both
strategies. It aims to
improve returns, reduce
risk, and enhance
diversification at a lower
cost than active investing
but slightly higher than
passive investing.
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SMART BETA INVESTING
iShares MSCI USA ESG Select ETF
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ROLE OF ESG IN SMART BETA INVESTING
Identify companies that align with sustainable business
practices.
Manage risks associated with poor governance,
environmental damage, or social issues.
Make better-informed decisions by analyzing financial,
business, and ESG data together.
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PRACTICAL METHODOLOGY FOR ESG-SMART
BETA INTEGRATION
CONTROVERSY ESG SCORING SMART BETA
SCREENING ALLOCATION
Eliminates the
bottom 30% of Applies factor-
Excludes industries based techniques to
companies within
with significant ESG construct a
each industry based
concerns. diversified and risk-
on ESG
performance. optimized portfolio.
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CHALLENGES IN ESG DATA AND REPORTING
INCONSISTENT
ESG RATINGS
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CHALLENGES IN ESG DATA AND REPORTING
INDUSTRY
BIAS
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CHALLENGES IN ESG DATA AND REPORTING
TRANSPARENCY
ISSUES
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MAC 301– MODULE 6
INTEGRATED
MANAGEMENT FOR
CAPITAL MARKETS AND
STRATEGY: VALUE VS
VALUES
ALPINE SKI HOUSE
Sustainable investment is about more than just
making money; it’s about making a difference. By
considering environmental, social, and governance
factors, we can help build a future that’s not only
financially successful but also better for people and
the planet.
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Every investment we make is a chance to contribute to
positive change. Together, our choices can shape a
world where both investors and communities thrive,
creating a brighter, more sustainable tomorrow for
everyone.
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If our investments have the power to create lasting
impact, what kind of legacy do we want to leave
behind?
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UP NEXT…
THANK
MODULE 7:
Strategy Design for Flourishing:
A Robust Method
YOU!
MODULE 8:
The Inequality-Aware
Organization
April 26, 2025 (Pre-Recorded Video)
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