![]() |
Terminologies May Differ – There are many approaches under the sustainable-investing umbrella. Examples include socially responsible investing (SRI); environmental, social, and governance (ESG) integration; and impact investing. There isn’t currently a uniform definition of these terms and different asset managers may define them differently. |
![]() |
Socially Responsible Investing (SRI) or Exclusionary Investing – The modern version of the term SRI has its roots in the 1960s and aims to avoid what some consider to be socially “bad” companies (think tobacco companies or casinos). |
![]() |
Environmental, Social, and Governance (ESG) – ESG criteria are a way to evaluate how a company behaves. For example, environmental standards can measure how a company treats natural resources; social standards can evaluate how a company manages relationships with its community; and governance criteria can focus on issues such as recruiting women and minorities for the board. |
![]() |
ESG in Action – The emphasis placed on ESG criteria varies across funds. Some funds may view ESG factors as one consideration among many as they make their investment decisions. Other funds may demonstrate a higher level of commitment to ESG investing by making it a key consideration in their investment decisions. |
![]() |
Impact Investing – This strategy generally involves seeking to generate positive, measurable, reportable social and/or environmental impact alongside a financial return. For example, an “impact” fund may invest in companies that strive to make the world a better place, such as renewable power-generation company, a water-treatment facility, or a company that seeks to eradicate a disease. |
![]() |
Performance Matters – Sustainable funds ”comfortably outperformed their peers” in 2020.1 Further diminishing lingering assumptions that sustainable investment strategies will underperform, 35% of sustainable funds finished in the top quartile of their Morningstar Categories and 66% in the top half.1 |
![]() |
Not Just for Millennials – Contrary to popular opinion, many investors across all ages feel positively about a sustainable portfolio: 44% of people age 71+ as well as 60% of people age 18-37 rated it favorably.2 |
![]() |
Explosive Growth – Sustainable investing is growing in popularity. During the last decade, it’s become a mainstream strategy as opposed to an aspirational concept. In fact, $17.1 trillion was invested in sustainable-investing strategies in the US at the beginning of 2020, up 42% from just two years prior.3 |
![]() |
Something to Talk About – A recent study found the top three issues for asset managers and their institutional clients are climate change/carbon, sustainable natural resources/agriculture, and board governance.3 Your list may be quite different. Talk to your financial professional about the causes you support or issues that concern you. |
Changing Perceptions – Despite some lingering reservations about sustainable investing, 57% of people say they would feel optimistic about incorporating sustainable funds into their portfolio. Many of those who felt positively attribute this to the positive environmental impact pursued by some sustainable-investing strategies.2 |
People Feel Good About Moving to a Sustainable Portfolio
Feelings about moving to a sustainable portfolio, while maintaining the same level of risk and diversification
Source: Schroders, “Beyond Profit: Sustainable Investing,” 2021. See footnote 2 for survey methodology.
Talk to your financial professional to see if sustainable investing is a sensible strategy for your portfolio.
1 Source: Morningstar, “Sustainable Funds US Landscape Report,” 2/19/20. According to Morningstar, in order for a fund to be included in the sustainable funds universe, ESG concerns must be central to its investment process and the fund’s intent should be apparent from a simple reading of its prospectus.
2 Source: Schroders, “Beyond Profit: Sustainable Investing,” 2021. Based on research collected from 23,000 people who invest globally. In the study, Schroders defines “people” as those who will invest at least €10,000 (or the equivalent) within the next 12 months and those who have changed their investments within the last 10 years.
3 Source: US SIF, “The US SIF Foundation’s Biennial “Trends Report” Finds That Sustainable Investing Assets Reach $17.1 Trillion,” 11/16/20. The Trends report counts two main strategies as sustainable investing: ESG incorporation—applying various ESG criteria in investment analysis and portfolio selection—and filing shareholder resolutions on ESG issues.
Important Risks: Investing involves risk, including the possible loss of principal. • Integration of environmental, social, and/or governance (ESG) factors into the investment process may not work as intended. • Focusing on investments that involve sustainable initiatives may result in foregoing certain investments and underperformance comparative to investments that do not have a similar focus.