An increasing number of investors considering the social impact of their investment dollars – for a variety of reasons. Some investors want to avoid supporting companies or industries which, in their opinion, are not making the world a better place — such as weapons manufacturers, tobacco companies, or firms that have a track record of polluting the environment or running sweatshop factories in third world countries.
Other ‘socially-responsible’ investors embrace companies they believe are enhancing our collective lives, which might include companies that produce solar, wind or other sustainable energy, embrace diversity in their workforce and on their corporate boards, bring clean water to global populations or provide lending services to impoverished communities around the world.
Whatever the reason, ESG (environmental, social, and governance) investing trends are enjoying rapid acceptance among investors. According to Morningstar’s fund research, $21.4 billion in new funds flowed into what it calls “sustainable funds” last year. There are now 303 mutual funds and ETFs in what Morningstar considers to be its “sustainable universe”.