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 created with the UN Principles for Responsible Investment (PRI) in 2019.
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. Over 80% of AQR AUM is ESG-related.*
Dedicated ESG solutions: As of June 30, 2023, we manage $20 billion in Sustainable portfolios. Portfolios managed according to our Sustainable process target significant carbon reductions in long-only and relaxed constraint accounts and net zero carbon exposure in long-short portfolios, avoid companies with the largest ESG risk exposures by imposing static and dynamic exclusions, and target an improvement in portfolio ESG profile. This process is offered in standalone long-only, total return and absolute return equity portfolios, as well as in the equity sleeves of multi-strategy total return and absolute return portfolios. We also manage customized portfolios for our clients to address specific ESG- or carbon-related priorities, and we feel our flexibility and capabilities in this space are distinguishing.
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 below.
* Approximate as of June 30, 2023, includes assets managed by AQR and its advisory affiliates. (ESG-related is defined as incorporating ESG-related signals and/or ESG exclusions.)
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.