Best-in-class funds most likely:

Best-in-class funds most likely target a higher ESG rating than that of a corresponding index.

Best-in-Class Approach: This strategy involves selecting companies that have the highest ESG ratings

within their sectors or industries, compared to their peers. The goal is to outperform the average ESG

performance of the corresponding index.

Higher ESG Standards: Best-in-class funds aim to include top performers in ESG criteria, thereby

achieving a portfolio that scores better on ESG metrics than the broader market index.

Selective Inclusion: These funds do not necessarily include only companies considered responsible

investments (B) or use a common set of ESG criteria across all sectors (C). Instead, they focus on

relative performance within each sector to ensure high ESG standards.

CFA ESG Investing Reference:

The CFA Institute’s guidance on ESG investment strategies discusses the best-in-class approach as

one that aims to surpass the ESG performance of benchmark indices by selecting the top ESG

performers within each sector​​​​.

======