Sustainability factors should be integrated into the different levels of strategic and tactical asset allocation. On a strategic level, an asset manager might consider taking material sustainability factors into account when defining its target allocation for the various asset classes (e.g. leave aside certain sectors or countries). On a tactical level, sustainability information might influence top-down decisions regarding the attribution to different sectors or markets at a given point in time. Asset managers might also decide to apply ESG factors purely in the bottom-up process, integrating such factors in the assessment of individual portfolio holdings.
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