The Fourier series is introduced as a very useful way to represent any periodic signal using a sum of sinusoidal (“pure”) signals. A display of the amplitudes of each sinusoid as a function of the frequency of that sinusoid is a spectrum and allows analysis in the frequency domain. Each sinusoidal signal of such a complex signal is referred to as a partial, and all those except for the lowest-frequency term are referred to as overtones. For periodic signals, the frequencies of the sinusoids will be integer multiples of the lowest frequency; that is, they are harmonics. Pitch is a perceived quantity related to frequency, and it may have a complicated relationship to the actual frequencies present in terms of the series. For periodic signals, changes in the relative phase of the partials do not change the perception of sounds that are not too loud.

This chapter explores the rationale for a pension fund to integrate sustainability in its investment analysis and decisions, and why engagement is an important tool for an active and long-term investor in creating value for beneficiaries. Based on our experiences this does not neccessarily carry the higher costs traditionally associated with active management, but it will put higher demands on asset managers and analysts to understand and translate new data and information into the fundamental financial analysis. In a time where increasing capital is being allocated to passive index strategies, we argue that active and long-term owners foster corporate accountability and a broader concept of value creation. We stress the importance of developing in-house capacity for engagement and stewardship, as this enables leverage on key industry insights, while at the same time recognising when investor collaboration towards a common objective is more efficent.