ESG Funds Perform Better

If investors want to maximise returns, then they should ensure environmental, social, economic, and financial system in which they invest is as healthy as it can be

David Harrell 23 February, 2018 | 3:20PM
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Sustainable investing, evaluating companies on the basis of ESG; environmental, social, and governance factors, isn’t new. The concept of socially responsible investing dates back to the 1970s, and it’s been nearly two years since Morningstar introduced a Sustainability Rating for mutual funds. Using company level ESG data from Sustainalytics, Morningstar assigns mutual funds Sustainability Ratings from 1 to 5.

The topic has garnered headlines recently after the release of this year’s letter to CEOs from Larry Fink, founder and CEO of BlackRock, the world’s largest asset manager. In the letter, Fink called for a “new model for corporate governance” and announced plans to double the size of BlackRock’s investment stewardship team.

We sat down with Jon Hale, Morningstar’s director of sustainability research, to discuss the topic.

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David Harrell  David Harrell is the editor of ClearFuture.