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A Guide to ESG Investing and ESG Funds

What if you could make investments that result in healthy returns for you—and for the society around you?

Investing is often seen as a selfish act—remember the famous “Greed is good” line in the film Wall Street? But in recent years, a new strategy for investing has emerged: One that balances the needs of the investor with the health of our environment and society.

Does this sound like the kind of investment strategy you’d like to pursue? If so, read on to learn all about ESG investment and ESG funds.


What Is ESG Investing?

In ESG investing, the letters stand for Environmental, Social, and (Corporate) Governance.

“Environmental” is fairly self-explanatory. It means that when investing, you look for companies that take steps to reduce their carbon footprint, rather than engaging in unfettered polluting.

“Social” applies to the way that a corporation in question handles issues like diversity and inclusion, and giving fair pay and benefits to every employee, from the lowest-ranked hire to the CEO.

Finally, “Governance” has to do with how a company is led. Is there a full, diverse board of directors? Are there checks and balances on how many raises and bonuses that corporate executives receive? And is there general transparency around leadership decisions?

If a company hits all three of these markers, then it is an excellent target for your ESG investing.

ESG Investing Is Profitable

Right now you might be thinking, “Okay, ESG investing sounds like a noble pursuit—but I still need to make sure my investments are profitable.”

Fortunately, ESG investing has proven itself as a viable investment strategy. In 2018, ESG investing grew to a $30 trillion market, and it’s only expected to grow more from there.

And to better your returns, you can use a strategy called “ESG integration.” That means you can incorporate ESG values into a broader investment strategy that also looks at things like annual returns and longterm growth potential.

Invest in ESG Funds

Do you want to get started with ESG investing, but aren’t sure where to start? If so, ESG funds might be the right option for you.

AN ESG fund is just like any other investment fund—but it ensures that every stock included in the fund will help better our environment, society, and/or corporate governance.

ESG Investing are a great way to diversify your portfolio without compromising your values. Ask your financial advisor about your ESG fund options to learn more.

Learn More About ESG Investing

Now that you’ve gotten a primer about ESG investing, you may be itching to start investing in companies with strong environmental, social, and corporate governance values. After all, we all have to share this one planet—so there’s not much point to making a lot of money if you aren’t also helping to better our society.

Like any investment strategy, ESG investing is only as effective as you are educated. So learn more about ESG investing—and investing in general—by reading the other helpful investment articles on our website.

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