Sustainable Investment Consulting & ESG Strategy Advisory

Three layers instead of one. The first is compliance and regulatory: are there material exposures that could block the deal or force expensive remediation after close (CSRD scope, CSDDD supply chain risk, SFDR Article 8/9 implications where relevant, and EUDR if the target touches regulated commodities). The second is operational: where does the target have efficiency gains that show up on EBITDA (energy intensity, waste disposal, packaging, water use). The third is strategic: which ESG factors move exit multiples in this sector and at this hold period. So the output isn't a score. It's the specific items that affect valuation, downside protection, the first 100 days post-close, and exit positioning.

Screening is a filter you apply before the portfolio is built. You exclude (tobacco, controversial weapons, thermal coal, gambling) or you include (best in class). It's binary: in or out. Integration is analytical. You keep the full investable universe and incorporate ESG data into the actual risk and return analysis on each name. So screening is about what you don't own. Integration is about how you analyze what you could own. Most funds run both, but which one drives the strategy varies significantly. We usually lead with integration and then layer screens for specific client mandates or regulatory constraints. If you're defending an ESG strategy to LPs, the distinction matters, because integration is harder to demonstrate and easier to misrepresent.

Most disputes come from the same places: the disclosed sustainable investment percentage doesn't match holdings, or marketing language is stronger than the strategy in the prospectus, or PAI data gaps undermine the "do no significant harm" assertion, or all three at once. The first question we ask is whether the fund should actually be where it claims to be. Over 300 Article 9 funds downgraded to Article 8 at the end of 2022 when ESMA tightened interpretation, and we still see managers overcommitted to classifications they can't defend. So sometimes the answer is remediation. Sometimes the answer is reclassification. We review the strategy doc, prospectus, marketing materials, PAI indicators, and portfolio holdings, then map the gap and what it would take to close it. If a different classification is more honest, that's the recommendation.

Every claim gets mapped to evidence. We read the prospectus and investor materials first and list every ESG claim including headline objectives, phrases about impact or transition alignment, emissions language, exclusions, and stewardship commitments. Each claim then needs a proof chain: data source, methodology, verification, and update frequency. Claims that can't support the chain get rewritten or cut before filing. This matters more now than it used to because the FCA anti-greenwashing rule applies across all communications (not just formal disclosures), and ESMA fund naming enforcement has already forced hundreds of EU funds to rename or restructure. So the operating assumption we use is: if you can't prove it to a regulator on a random Tuesday, you can't put it in the prospectus.