We identify and assess the key ESG factors for each strategy based on industry knowledge and market standards, with variations across subsectors. We determine the weights for the ESG pillars by leveraging our extensive knowledge of the asset classes, combined with third-party research.

To fully assess our material risks and opportunities across our strategies, we assess underlying company metrics & KPIs for coverage, accuracy, and timeliness. Generally, the most relevant and decision-useful factors drive our scores. These factors commonly include, but are not limited to, physical and transition risks of climate change, and companies’ relationship with their employees and their customers, including but not limited to, human capital management. We believe that strong corporate governance is often the foundation for implementing sound environmental and social practices. Key governance issues may include, but are not limited to, corporate governance structure, board composition and director independence, and management acumen.

We generate proprietary models consisting of internal E, S, G, and aggregate ESG scores for each company in our investment universe. These varying models are developed through in-depth material ESG analysis, augmented by third-party data, and informed by company and industry knowledge, direct engagement with management, and regulatory filings. Our internal expertise guides this process, with internal scores periodically reviewed to ensure accuracy and relevance.

Our investment team integrates ESG factors into the fundamental research process by generating proprietary ESG scores that reflect costs, risks, and opportunities. These scores may impact company valuations and inform investment decisions. We recognize and accommodate the unique characteristics of each asset class when determining the most effective methods for integrating ESG analysis into our investment strategies, ensuring tailored and informed decision-making.

As a fiduciary, engagement is central to our research process, serving as a structured platform for dialogue with portfolio companies, regulators, and industry groups. Embedded in our tailored ESG integration strategy, this engagement enhances our investment decisions and drives positive change.

We believe the size and experience of our Investment team, together with the frequency and depth of their interactions with companies, enable a deep understanding of management credibility and strategy. This allows us to assess material ESG considerations beyond the scope of third-party research firms. While third-party data is valuable, our own proprietary research can also be valuable for analyzing how companies address potential ESG risks. Our ESG integration process enhances our investment decisions by regularly reviewing the effectiveness of our monitoring processes as ESG data evolves. We are dedicated to establishing a structured process for continuous improvement, enabling us to consistently review and enhance our outcomes.

Our ESG team is strategically placed within the Investment team under the leadership of Khalid Husain, Head of ESG, to ensure ESG principles are seamlessly integrated into our investment processes. This positioning allows for specialized expertise to directly contribute to refining and advancing our ESG roadmap priorities. The ESG Team has a range of backgrounds including ESG strategy and integration, portfolio engagement, credit analysis, environmental project management, sustainable product offerings, investment stewardship, reporting, corporate responsibility, and roles within non-governmental and international organizations.

Additionally, our ESG captains provide tailored guidance on company assessments, sector analysis, and strategic engagement and voting. The team’s diverse expertise, ranging from ESG strategy and integration to sustainable product offerings and corporate responsibility, empowers effective collaboration on ESG integration and stewardship initiatives across different asset classes.

Cohen & Steers is committed to investment excellence and delivering superior long-term returns to our clients. Our leadership position in listed real assets and alternative income amplifies our voice and influence when we engage with companies—whether we currently invest in them or not. By nurturing ongoing relationships and maintaining active engagement, we strive to encourage continuous improvement across companies, issuers, and entire industries. This proactive approach ensures our ESG advocacy maximizes impact, driving positive change and enhancing our investment outcomes.

The presence of market-wide and systemic risks provides an opportunity for our investment teams to engage with our companies and discuss opportunities and implications. We believe that some ESG issues such as climate change can pose systemic risks. Our general view is that companies that set a clear climate transition pathway can make strategic decisions that may enhance financial and operating performance, reduce operational and reputational risks, and improve long-term shareholder returns. The application of these principles occurs in part through our integration of costs related to carbon mitigation for strategies such as infrastructure, green risks and opportunities in real estate, analysis of fossil fuel versus renewables financing for banks in preferred securities, and analysis of decarbonization opportunities and challenges for natural resource equity and infrastructure. Assets in certain areas could be subject to acute hazards such as hurricanes, storms, wildfires and flooding as well as chronic ones such as sea level rise, increasing temperatures, and droughts. The manifestation of these hazards could lead to operational and other impacts in our portfolios.