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Sustainable Investing Insights

Sustainable funds use environmental, social and corporate governance (ESG) criteria to evaluate investments and assess their social impact. The topics below help advisors and investors alike determine their appetite for sustainable investing and how to tailor an ESG strategy to their goals.

Sustainable funds exploded in popularity between 2015 and 2021. However, money flowed out of U.S. sustainable funds at a record $6.0 billion in 2022’s final quarter. The annual Morningstar Sustainability Landscape Report examines recent growing pains and analyzes performance against category peers.

Morningstar research suggests thematic sustainable funds present opportunity by boosting returns and identifying and reducing risk. Water funds and alternative energy funds account for the majority of sustainable thematic funds. The Morningstar Global Thematic Funds Landscape Report covers them in detail.

So, who is attracted to sustainable investing? Contrary to the stereotype that sustainable funds are just for millennials, the population includes all ages and genders. If you’re an advisor, take noteMorningstar data shows DIY investors make up a significantly larger portion of ESG investors than advisor clients.

For helpful tools like ESG Risk Ratings, climate research, and carbon emissions data, be sure to visit Morningstar Sustainalytics.

Learn more about sustainable investing below.