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Sustainability Matters

Investing in a Core Low-Carbon Fund

Carbon-risk metrics reveal dozens of choices.

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If you are concerned about global warming and are a fund investor, one thing you can do now is invest in a low-carbon mutual fund. By that, I'm not talking about devoting a small portion of your assets to a fund focused on renewable energy or green solutions, although I think that's a good idea, too. I'm talking about lowering the carbon risk in your core portfolio by investing in a diversified low-carbon large-cap stock fund. Morningstar made that easier than ever to accomplish last May when we began identifying low-carbon funds across the universe of open-end funds and exchange-traded funds.

Based on Sustainalytics' innovative new company carbon-risk scores, funds earn the Morningstar Low Carbon Designation if the companies they hold exhibit low overall carbon risk and have lower-than-average exposure to companies with fossil-fuel involvement.

Jon Hale does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.