“So what you are doing or what we do in particular is we are scoring all the companies or securities within a certain sector or asset class, and we’re scoring the ESG characteristics, such as waste management, water usage on the environmental side. On the social side is how they treat their employees, how do they treat their customers. And then on the governance side, it includes things like share structure, board structure, but also diversity on the board as well,” Kremenstein said.

Investors have shown a growing affinity for ESG-themed investments, especially if the responsible investment themes can achieve similar or better returns compared to traditional equity exposure. More are looking into competitive investment options that have a positive impact on society without negatively impacting their diversified portfolios.

“We feel that these are ways to really score companies for quality factors but in a non-financial way,” Kremenstein added.

For more ETF-related commentary from Tom Lydon and other industry experts, visit our video category.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.