An ESG integration approach on more concentrated holdings of fewer securities is best described as:

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The question asks about an ESG integration approach described as focusing on more concentrated holdings of fewer securities.
Option 1: 'a quantitative multi-factor strategy' — This option represents a systematic, model-driven approach that relies on predefined factors and algorithms to select and weight a broad universe of securities. It typically aims for diversification and repeatable signals, not concentrated, stock-picking discretion by a portfolio manager. Therefore it does not align with the notion of fewer, highly chosen holdings driven by ESG integration in a discretionary manner.
Option 2: 'a discretionary strategy' — This choice fits the description. A discretionary approach involves active, hands-on security selection by the portfolio manager or investment team, allowing for concentration in a small number of securities based on ESG assessments, convictions, and qualitative judgment. The emphasis on fewer securities and ESG considerations aligns with a human-driven, judgment-based process rather than a purely mechanical one.
Option 3: 'an index-based strategy' — Index strategies track a defined benchmark and typically aim for broad exposure with limited active deviation. They inherently emphasize diversification and replication of an index, not concentration in a limited set of securities chosen through ESG integration. Hence, an index-based approach does not match the described concentrated, discretionary style.
In summary, the description points toward an active, manager-driven process that emphasizes ESG factors in selecting a smaller number of securities, which is characteristic of a discretionary strategy rather than a quantitative multi-factor or index-based approach.

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An ESG integration approach on more concentrated holdings of fewer securities is best described as:

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