ESG criteria at a glance

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ESG criteria at a glance

ESG criteria complement the classic investment objectives

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ESG criteria can complement the investment objectives of return, risk and liquidity, with environmental, social and governance-related aspects. The three ESG criteria provide orientation. They can be understood as a guidance to sustainable investing.

_{* The below is merely an example and not an exhaustive list.}

Carbon footprint (CO₂ emissions)
Conservation of natural resources
Environmental protection

Human rights
Labour standards
Consumer protection

Business ethics
Incentive structures
Competitive behaviour

The DWS ESG Engine

How we create robust ESG assessments

ISS-ESG
MSCI ESG
Morningstar Sustainalytics
S&P Trucost

+ publicly available sources (e.g. Freedom House and Urgewald)

+ DWS proprietary research

Sector Involvement
Norm Violations
ESG Quality
Emissions & Climate
UN Sust. Development Goals
Sovereign Assessments

+ many more

Assessment of strengths and weaknesses of external ESG indicators
Selection of most relevant data providers for each ESG facet

Consensus approach and reconfirmation across several data providers
Data quality checks via ESG Methodology Working Group and Sustainability Assessment Validation Council

Continuous improvement of existing methodologies
Development of new proprietary assessments

Flexibility in ESG criteria
Broad coverage with 3000+ data points
Fully integrated ESG data (e.g. BRS Aladdin, MSCI Barra)
100% MSCI ACWI^[1] coverage and ~13,000^[2] issuers assessed

_{* ESG facets refer to a component or a specific aspect of environmental, social or governance criteria that serve as standards for assessing an issuer. For illustrative purposes only.}

	DWS ESG Assessment methodology / exclusion criteria	Assessment or revenue threshold
DWS Group policies	DWS Coal Statement (coal mining and power generation from coal ≥ 25% revenue; coal expansion plans)	Non-compliant
	DWS Controversial Weapons Statement (cluster munition, anti-personnel mines, biological and chemical weapons)	Non-compliant
Controversial sectors (excl. climate)	Other controversial weapons (depleted uranium weapons, incendiary bombs containing white phosphorus, non-detectable fragmentation ammunition, blinding laser device)	Involvement
	Manufacturing or selling of nuclear weapons or key components of nuclear weapons	Involvement
	Manufacturing of products and/or provision of services in the defence industry	≥ 5%
	Manufacturing and/or distribution of civil handguns or ammunition	≥ 5%
	Manufacturing of palm oil	≥ 5%
	Cultivation and production of tobacco	≥ 0%
	Manufacturing of adult entertainment	≥ 5%
	Manufacturing of products in and/or provision of services for the gambling industry	≥ 5%
	Nuclear power generation and/or uranium mining and/or uranium enrichment	≥ 5%
Climate-related assessments	Unconventional extraction of crude oil and/or natural gas (including oil sand, oil shale/shale gas, Arctic drilling)	≥ 0%
	Exploration, mining, extraction, distribution or refining of hard coal and lignite	≥ 1%
	Exploration, extraction, distribution or refining of oil fuels	≥ 10%
	Exploration, extraction, distribution or refining of gaseous fuels	≥ 50%
	Electricity generation with a GHG intensity of more than 100 g CO₂ e/kWh	≥ 50%
General ESG assessments	DWS ESG Quality Assessment (corporates & sovereigns)	F
	Freedom House Status (sovereigns)	"Not free"
	MSCI OECD Alignment (corporates)	"Fail"
	Good Governance is measured with Norm Controversy Assessment (corporates)	F / M

	DWS ESG Assessment methodology / exclusion criteria	Assessment^[3] or Revenue threshold^[4]
PAB-Exclusions	Controversial weapons (anti-personnel mines, cluster munitions, chemical and biological weapons, blinding laser weapons, weapons with non-detectable fragments, depleted uranium weapons/munitions and/or incendiary weapons using white phosphorus)	Involvement
	Cultivation and production of tobacco	≥ 0%
	Norm Controversy Assessment	F
	Exploration, mining, extraction, distribution or refining of hard coal and lignite	≥ 1%
	Exploration, extraction, distribution or refining of oil fuels	≥ 10%
	Exploration, extraction, distribution or refining of gaseous fuels	≥ 50%
	Electricity generation with a GHG intensity of more than 100 g CO₂ e/kWh	≥ 50%
Controversial sectors (incl. climate)	Coal expansion plans	> 0%
	Nuclear power generation and/or uranium mining and/or uranium enrichment	≥ 5%
	Unconventional extraction of crude oil and/or natural gas (including oil sand, oil shale/shale gas, arctic drilling)	> 0%
Other ESG assessments	Freedom house status (sovereigns)	“Not free”
MiFID II-related sustainability information	Share of sustainable investments (SFDR)	Always 100% for Green, Social and Sustainability Bonds