Integration strategy can take ESG factors into consideration in the existing credit rating framework of bond issuers, which is conducive to the establishment of a unified credit risk assessment system, rather than separate evaluation of traditional credit risk and ESG risk.
Negative/ exclusionary screening is more suitable for the centralized screening of the same type of risks, which are usually sudden, dynamic, and concentrated in a certain type of issuer. For example, credit risks of private enterprises increase when risk appetite declines, issuers in heavily polluted areas face more severe operating pressure when environmental regulation is strengthened, and small financial enterprises face higher liquidity risks when financial market risks occur. Negative/ exclusionary screening help to compare the risk levels of different issuers facing the same problem and to adjust the list of evasive targets according to the change in risk level.
In general, integration strategy establishes a unified and relatively stable risk assessment system, and screening strategy has faster ability and flexibility to deal with sudden risks.