Climate change has become a factor that is impossible to ignore for any long-term investor. And the war in Ukraine risks derailing Europe’s ambitious green energy aspirations. At the same time investors face other dilemmas that make effectively implementing practical ESG considerations across a liquid portfolio difficult. ESG investing therefore has to evolve to 2.0. Most conventional ESG data is backward-looking and does not reflect potential green transformation candidates with the highest impact potential or positive ESG score momentum. A forward-looking approach is thus needed. Union Investment has developed a proprietary forward-looking transformation rating that is integrated in the fundamental investment process as a cornerstone for effective ESG investing. Building a reliable and extensive ESG database has proven key to the ESG architecture. Aligning a liquid portfolio with the Paris climate goals does not only have regional or sector implications, also it requires the analysis of large amounts of carbon data as well as simulations on the future emissions pathway. Artificial Intelligence and machine learning tools are applied to generate better investment performance and build carbon-efficient portfolios.