Analyzing a portfolio's social impact exposure involves understanding the broader social context before drilling down to individual company specifics. The best approach is to first understand the material social topics at the country and sector levels, then the company level.
* Country and sector levels, then the company level (B): Starting at the country level provides insight into the social issues prevalent in the region, influenced by local laws, regulations, and cultural norms.
Next, analyzing at the sector level helps to identify sector-specific social risks and opportunities. Finally, understanding these issues at the company level allows for a more detailed analysis of how individual companies manage these social impacts.
* Company and country levels, then the sector level (A): This approach might miss out on sector-specific social issues that are critical for a comprehensive analysis.
* Company and sector levels, then the country level (C): This approach overlooks the broader country-level social context, which can significantly influence sector and company-level social impacts.
References:
* CFA ESG Investing Principles
* MSCI ESG Ratings Methodology (June 2022)