Here’s how ESG funds perform

Article Excerpt

Sustainable investing has expanded quickly over the past decade. Still, investors are rightly concerned about whether a focus on environmental, social, and governance (“ESG”) aspects may detract from their overall portfolio performance. What is sustainable investing? Many socially conscious investors now complement their traditional fundamental company analyses with an additional review of a firm’s environmental, social, and governance practices. They use this approach to take account of the values and beliefs dictating the behaviour of companies. One major concern for investors who consider including ESG criteria in their investment decisions is the fear that those investments will be less profitable. So far, though, there’s no conclusive evidence either way. According to research published by Morningstar in 2018, 16 out of 20 equity indexes in the Morningstar Global Sustainability Index family, have beaten their non-sustainability equivalents over their lifespans. The Sustainable indexes have also been less volatile while the underlying companies on average had stronger balance sheets than their non Sustainable equivalents. However,…

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