Big technology firms are scoring high on implementing environmental, social, and governance (ESG) initiatives into their core businesses. This bodes well for ESG-focused ETFs like the SPDR® S&P 500® ESG ETF (EFIV) with big tech companies in its holdings.
EFIV seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of an index that provides exposure to securities that meet certain sustainability criteria (criteria related to environmental, social and governance ("ESG") factors) while maintaining similar overall industry group weights as the S&P 500 Index. In seeking to track the performance of the S&P 500 ESG Index (the "index"), the fund employs a sampling strategy, which means that it is not required to purchase all of the securities represented in the index.
Large Tech Want In on ESG
Per a Citywire Selector article: "Large tech firms scoring highly based on environmental, social and governance (ESG) factors outperform those that score poorly, a new study has found. Invisage, an analytics platform, has carried out the analysis on 300 large US technology stocks by looking at their ESG profile as a means to produce performance in the last 10 years."
"The group divided the universe into two baskets called ‘big tech’ and ‘rest of the tech’," the article added. "Big tech includes Alphabet, Amazon, Apple, Facebook, Microsoft, Netflix, Nvidia and Tesla, and the remaining 292 companies were placed in the ‘rest of the tech’ basket."
"If you look at tech it is not neutral and there are specific KPIs that are related to investment performance within ESG. If you are able to identify these – like community and charity, environmental transparency, pollution prevention, management ethics - and put together a portfolio of tech investments that overweights those assets, you will be able to identify 6 to 8% additional return," said Brijesh Malkan, CEO of AcquiredKnowledge, a business strategy consultancy that works with Invisage.
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