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American Funds Growth Fund of Amer C GFACX Sustainability

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Sustainability Analysis

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Sustainability Summary

American Funds Growth Fund of Amer may not appeal to sustainability-conscious investors.

This fund lands in the 10% of strategies with the highest ESG risk in the US Equity Large Cap Growth category, earning it the lowest Morningstar Sustainability Rating of 1 globe. Funds with 4 or 5 globes tend to hold securities that are less exposed to ESG risk. Unlike impact, which focuses on generating positive environmental and societal outcomes, ESG risk measures the degree to which investments could be affected by material ESG issues, including climate change, biodiversity, product safety, community relations, data privacy and security, bribery and corruption, and corporate governance.

One potential issue for a sustainability-focused investor is that American Funds Growth Fund of Amer doesn’t have an ESG-focused mandate. Funds with an ESG-focused mandate are more likely to align with the expectations of an investor who cares about sustainability issues. The fund exhibits high exposure (15.70%) to companies with severe controversies. Controversies are incidents that have a negative impact on stakeholders or the environment, which create some degree of financial risk for the company. Examples of types of controversies include bribery and corruption scandals, workplace discrimination and environmental incidents. Severe and high controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. Such controversies can also damage the reputation of both companies themselves and their shareholders.

One key area of strength for American Funds Growth Fund of Amer is its low Morningstar Portfolio Carbon Risk Score of 7.25 and very low fossil fuel exposure over the past 12 months, which earns it the Morningstar Low Carbon Designation. Thus, the companies held in the portfolio are in general alignment with the transition to a low-carbon economy.

ESG Commitment Level Asset Manager