Finance Glossary
Best-in-class
What does Best-in-class mean?
The Best-in-class approach is a type of ESG selection that involves favoring companies with the highest extra-financial ratings within their sector of activity, without favoring or excluding any sector compared to the stock index used as the baseline.
In contrast to a "best-in-universe" approach, it avoids sector biases that would lead to supporting only the sectors best positioned regarding E, S, and G issues.
It allows for maintaining the sector allocation of a fund in line with that of its benchmark index, unlike thematic ESG approaches or sector exclusions.