ESG Engine

The heart of the ESG investment process

ESG Engine

Those who invest according to ESG criteria have to take several factors into account when choosing suitable investments. The ESG Engine can provide a solution.

" "Our strength lies in implementing the necessary technology in a flexible and robust way. Turning something into a solid methodology that is fully integrated into portfolio management systems represents a real achievement."

Carsten Keil Head of Data Science Responsible Investments

The DWS ESG Engine was developed in direct response to growing data and analytic expertise in the sphere of responsible investing. As a proprietary software system that combines the different perspectives and approaches of five leading external data providers, it has become the centerpiece of our commitment to integrating ESG into our investment process and our Active and Passive portfolios.

The power of objectivity

The first basic motivation that compels investors to consider ESG issues when choosing the sectors, companies and projects in which they invest revolves around strictly ethical concerns. The second revolves around a combination of investment opportunity and risk management.

Delivering value to the client

The ESG Engine is fully integrated into our overarching investment process. The huge array of data it produces has been successfully incorporated into our Aladdin next-generation research system, meaning that all of our investment managers and analysts – irrespective of whether they are responsible for dedicated ESG strategies or “classical” portfolios – can check ESG risk exposures at any time.

This reflects our belief that there is no “one size fits all” approach to responsible investing. Although we set our ESG Investment Standard for our dedicated ESG funds, the assessments produced by the ESG Engine are interpreted in light of a client’s preferences. We believe this high degree of coverage and flexibility is essential to devising the bespoke and robust ESG solutions that investors increasingly want.

How to build ESG solutions with our ESG engine


Screening is the world’s most popular ESG investing methodology. Traditionally, it is used to exclude certain sectors, companies or practices on the basis of specific criteria.The raison d’être of any such process for investors is to forego returns from businesses they deem controversial.

Uniquely, the ESG Engine’s screening procedures draws on the expertise of five leading external providers of ESG data: ISS-ESG, MSCI, ESG Book, Morningstar Sustainalytics and S&P Trucost as well as publicly available sources and proprietary DWS research.


  • MSCI

  • Morningstar Sustainalytics

  • S&P TruCost

  • ESG Book

Automated Analysis of Multiple ESG Facets

Controversial Sectors

Corporate negative / exclusionary screening

Negative/exclusionary screening serves as the ESG Engine’s first step in choosing responsible investments in the corporate sphere. The process identifies and rules out companies associated with activities that do not meet specific ESG criteria. As mentioned above, these criteria may be based on ethical concerns or risk considerations. A key question is the extent to which a company might profit from sectors that an investor may deem controversial, and it is on this basis that the ESG Engine usually determines exclusions.

Controversial Sectors

  • Defense
  • Cluster bombs
  • Nuclear weapons
  • Coal and nuclear energy
  • Tobacco
  • Gambling
  • Adult entertainment
  • etc.

International Norms

Corporate norms-based screening

Norms-based screening focuses on concerns such as human rights abuses, child/forced labour, health and safety, environmental impact and issues around business ethics. Here, too, the ESG Engine uses a process that offers a powerful competitive edge. Crucially, our multi-provider model means it is not necessary to rely on a single “signal” about non-compliance. Instead, by drawing on a variety of inputs, the ESG Engine can seek confirmation and even reconfirmation of failures to meet international norms.

Sovereign norms-based screening

All of the strategies discussed so far can also be applied in a non-corporate setting. The flexibility of the ESG Engine means similar screening approaches can be used to gauge would-be responsible investments in around 200 sovereign nations. In these instances, crucially, norms-based tests are conducted at a sovereign level. They might assess compliance on issues such as corruption, human rights, child/forced labour, commitment to the Kyoto Protocol and the prevalence of democracy/autocracy.

International Norms

  • Human rights
  • Child labour
  • Forced labour
  • Environmental damage
  • Employment conditions
  • Business ethics
  • Corruption
  • etc.

Best-in-Class ESG Assessments

DWS ESG Assessment

Although sector and norms-based tests are essential, we believe responsible investing should take into account positives as well as negatives. This is why the ESG Engine also uses best-in-class screening, assessing hundreds of factors to produce aggregate rankings. From these we derive our proprietary DWS ESG Assessments which aim to identify the true ESG leaders and the true ESG laggards by peer group – ranking corporations against their peers by both sector and region

DWS ESG Assessments for Sovereigns

With sovereigns, just as with companies, the interrelations of various factors can be analysed to produce positive as well as negative outcomes. Using this approach, the ESG Engine produces the rankings from which we derive our proprietary DWS ESG Assessments for Sovereigns. Like our corporate ESG Assessments, our ESG Assessments for Sovereigns aim to identify the true ESG leaders and the true ESG laggards – in this case on a sovereign basis. This process also takes a peer-group approach, valuing emerging markets separately from their developed counterparts.

Best-in-Class ESG Assessments

  • 360-degree-analysis
  • Cross vendor
  • Reconfirmed ESG-assessment

  • A-F ratings identify leaders and laggards

CO2 and Climate


The problem of global warming is high on the agendas of many investors who favour the integration of ESG considerations into their investment decisions. The ESG Engine reflects this by facilitating a detailed assessment of corporations’ impact on climate change. This involves the expert evaluation of numerous environmental factors, including carbon footprint, use of fossil fuels, carbon ratings and use of natural resources. One of our seven ESG data providers, Trucost, is an acknowledged market leader in this field of analysis.

CO2 and Climate:

  • Carbon Footprint
  • Carbon intensity
  • Climate transition risk
  • Water intensity

Flexible ESG Investment Solutions for Clients

Dedicated ESG Solutions

Dedicated ESG Solutions



ESG Integration

ESG Integration

Issuer research

Portfolio scoring

Risk and opportunities

CIO View