Environmental, Social and Governance (ESG)
AQR is committed to helping our clients achieve their ESG goals. We seek to integrate ESG in both our asset selection and ownership decisions, guided by the responsible investment framework we collaborated with the UN Principles for Responsible Investment (PRI) to create and overseen by our ESG Steering Committee.
Responsible Asset Selection
Across the firm: AQR has used ESG-related signals in our investment models since inception in 1998; we believe that incorporating such signals provides a more holistic view of a given company.
Dedicated ESG solutions: Our “Sustainable” process seeks to statically and dynamically excludes stocks with the largest ESG risk exposures (we actively short these names where appropriate), at the same time targeting a higher ESG score than the benchmark. We can combine this process with climate-awareness, reducing portfolio carbon intensity.
Transparency is a primary focus of AQR’s stewardship activities, and our engagement is undertaken at the firm level. We engage directly with portfolio companies on a number of issues, both proactively (engaging with our top firmwide holdings with current ESG concerns, in the interest of greater transparency and disclosure) and reactively (selective engagement with portfolio company management on certain proxy issues). We also partner with peers and clients on issues that we feel are best addressed through collaborative engagement and pursue research into other areas where active ownership may exert positive influence on corporate transparency and disclosure of ESG issues.
We seek to align proxy voting with long-term value creation, including on ESG issues. We vote using a Sustainable policy in all of our applicable commingled funds and can customize proxy voting in separate accounts to meet client needs.
AQR employees publish frequently on ESG. Explore over 20 years of ESG-related insights here.
ESG at AQR
In this video introduction, we discuss the basics of ESG investing and how we incorporate ESG information into our strategies at AQR.