DWS is targeting its non-ESG focused funds with the rollout of its Smart Integration data and artificial intelligence process, designed to enforce stricter ESG investment criteria
Smart Integration will leverage forward looking data and AI to identify portfolio risks, primarily companies with high climate transition risks and those that violate international norms.
It will also rank these companies by the highest risk exposure, enabling DWS to engage with these to influence action from improvement.
As a last resort, DWS will exclude companies from its investment universe it they do not act.
In addition to this, DWS is increasing the threshold on ESG screening significantly, with a panel of experts in place who will screen and advise portfolio managers on their investments, whereas before it used to be solely up to the individual portfolio managers.
Smart Integration will initially be applied to one fifth of the company’s total assets under management (€700bn as of 31 March 2020), targeting non-ESG focused funds first, before being rolled out across the DWS investment range.
Asoka Woehrmann (pictured), CEO of DWS said: “The dialogue with companies on corporate strategy – engagement – is the most powerful tool we have as a fiduciary asset manager to make a positive impact on ESG practices. I am proud that with the introduction of ‘Smart Integration’ DWS has set up an own overarching taxonomy to apply its influence. This is a major step forward towards becoming an ESG leader in our industry.”
A number of investment firms have been announcing the enhancement of their ESG processes and stepping up integration in recent months including Schroders, BlackRock and JP Morgan Asset Management.