With a best-in-class strategy, companies are not only evaluated in financial terms by rating agencies or analysts, but also in the areas of environment, social affairs and corporate governance. These are called special ESG ratings.

The best-in-class strategy rewards companies with the best ESG ratings, e.g. only making investments in firms that are rated best within their industry. The intuition behind this is to send a signal to competitors to intensify their efforts on ESG matters. The aim is to increase market value or attract new capital. 

More on other strategies in the glossary.