Sustainable investing considers that progress towards solving global challenges - such as climate change, social inequality and unfair business practices - can be made by investing in companies and enterprises that promote sustainability or have sustainable business practices.
Conventional investing seeks an acceptable risk/return profile with no investing limitations beyond suitability.
Exclusionary screening excludes individual companies or entire industries from portfolios if their activities conflict with an investor’s values, such as fossil-fuels, gambling or alcohol.
Integration is a strategy that considers environmental, social and governance (ESG) criteria as part of its analysis and portfolio construction to mitigate risks or invest in high quality companies.
Impact investing aims to have a social or environmental impact alongside financial return, with a focus on intentionality and measurement of impact.
Philanthropy seeks the promotion of causes through direct financial support.
Studies have shown that companies that operate in a sustainable manner provide better investment performance.*
* Eccles, Robert G. and Ioannou, Ioannis and Serafeim, George, “The Impact of Corporate Sustainability on Organizational Processes and Performance.” (November 23, 2011). Management Science, Forthcoming.
Companies that ignore their social and environmental impacts may face regulatory and governance risks.