AQR is committed to helping our clients achieve their ESG goals. We seek to integrate ESG in both our asset selection and our ownership decisions.
Across the firm, E, S, and/or G-related signals are actively integrated in the majority of our portfolios. We also offer dedicated ESG solutions. These include Sustainable strategies that incorporate negative screens and positive tilts, portfolios customized with our clients to address specific ESG priorities, and, in support of the goals of the Paris agreement, portfolios targeting substantial carbon reduction.
To learn more about ESG investing, visit our Learning Center here.
Our Reports & Policies
ESG Annual Report
As part of our commitment to ESG, we release an annual report that details our yearly ESG developments and progress, as well as outlining our ESG approach, governance structure, and dedicated resources.View Report
For commingled client assets, AQR takes a sustainable approach to proxy voting in order to promote sustainable practices in portfolio companies. Review our procedures for and approach to proxy voting.
Explore our Engagement Policy, which is grounded in our fundamental belief in open dialogue and transparency, as well as our conviction that improvements in corporate governance are paramount in well-functioning capital markets.
Our ESG Research
ESG is an important part of our research agenda. Explore our published research and insights in this area:
Supply Chain Climate Exposure
To manage climate risks, investors need reliable climate exposure metrics, but such risks may be difficult to measure, particularly along the supply chain. Using broadly accessible data, we propose an intuitive metric that quantifies the exposure a company has to customers and suppliers. Our metric is related to scope 3 emissions and captures the strength of economic linkages as well as the overall climate exposure of a firm’s customers and suppliers.
Looking Forward with Historical Carbon Data
Increasingly many allocators are interested in computing their portfolio’s carbon footprint. We show that historical emissions data are useful despite a substantial 1-2 years’ lag typically to when investment portfolios are built.
(Car)Bon Voyage: The Road to Low Carbon Investment Portfolios
We discuss how an investment portfolio could dramatically reduce its carbon footprint, potentially even achieving a ‘net zero’ carbon footprint. We discuss the pros and cons of techniques to achieve carbon reduction goals, including security selection, shorting high carbon footprint companies, and trading instruments such as carbon offsets and carbon permits.
AQR participates in the sustainable investment community, with colleagues serving on ESG-related working groups of numerous industry associations across geographies. AQR has been a signatory to the UN PRI since 2014, and we are in fact close collaborators. In 2019, AQR and PRI co-created a framework for Responsible Investing, and AQR colleagues have served on several PRI working groups and committees. Additionally, AQR has been a supporter of the Task Force on Climate-related Financial Disclosures (TCFD) since 2018, and a CDP investor signatory since 2020. AQR is also a founding member of the MIT Aggregate Confusion Project, an initiative which aims to improve ESG measurement.
Certified Carbon Neutral
AQR has chosen to offset our emissions since 2019, and since 2021 we have been a CarbonNeutral® certified company. For the first time in 2022, a third-party consultant, RSK, reviewed AQR’s GHG assessment calculations. Our carbon offset efforts span all offices globally and include emissions related to business travel and homeworker emissions.
AQR is committed to promoting sustainability and social responsibility, and we have a number of initiatives supporting these efforts within our operations and in our community. Through ESG in the Office, we strive to create a more sustainable workplace through education, conservation, and innovation. Our ESG in the Office Committee brings together colleagues from across the firm to enhance the management of ESG in our own business practices. This initiative has several areas of focus, including reducing the consumption of single-use non-recyclable material, organizing environmental volunteer projects for employees, reducing our carbon footprint, and offsetting what we cannot eliminate.
ESG in the Office
We strive to create a more sustainable workplace through education, conservation, and innovation. Our ESG in the Office Committee began as an employee-originated initiative, bringing together colleagues from across the firm to enhance the management of ESG in our own business practices. This initiative has several areas of focus, including reducing the consumption of single-use non-recyclable material, organizing environmental volunteer projects for employees, reducing our carbon footprint, and offsetting what we cannot eliminate. These efforts helped the firm offset 100% of our global carbon footprint internally.
*As of September 30, 2023, ~80% of AQR’s assets under management integrated ESG-related alpha or risk signals. We include ESG-related signals in our multi-factor security selection models as standard, and have since AQR’s inception; in all portfolios, we will incorporate ESG to the extent that we believe it improves the risk/return profile, consistent with our research on the ESG-efficient frontier.
**As of the same date, AQR managed ~$19 billion in dedicated ESG solutions, designed in service of our clients’ ESG-related objectives. Portfolios managed according to our standard ESG process target significant carbon reductions in long-only and relaxed constraint accounts and net zero carbon exposure in long-short portfolios, avoid companies with the largest ESG risk exposures by imposing static and dynamic exclusions, and target an improvement in portfolio ESG profile. In relaxed constraint and alternatives portfolios, we may actively short the worst ESG offenders. We currently offer this process for equity, multi-strategy absolute return, and total return portfolios.