The "S" in ESG: the ugly duckling of investing

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ESG is an acronym that stands for Environment, Social, Governance. Our ESG framework takes into account applicable regulations and is assessed and updated continually, plus guiding principles developed in-house based on Deutsche Bank’s values and beliefs.

There is currently a lack of uniform criteria and a common market standard for the assessment and classification of financial services and financial products as sustainable. This can lead to different providers assessing the sustainability of financial services and financial products differently.

In addition, there are various new regulations on ESG and Sustainable Finance, which need to be substantiated, and further draft regulations are currently being developed, which may lead to financial services and financial products currently labelled as sustainable not meeting future legal requirements for qualification as sustainable.

We utilize data as well as ESG assessment methodologies that are supplied by independent third-party provider(s). These third-party assessment methodologies and corresponding ratings are therefore subject to change, which may result in turnover in investments within a portfolio to remain in line with an agreed ESG baseline.

ESG ratings are not currently regulated. Therefore, it is important to note that there is a selection of such data providers in the market, and methodologies between these can vary leading to different ratings for the same instruments.

ESG principles may result in a less diversified, more concentrated portfolio. ESG investing may result in the exclusion of specific industries.