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The difference between true ESG and greenwashing

The rise of environmental, social and governance (ESG) data in investment research has led to more frequent greenwashing—the practice of overstating, or even inventing, sustainable initiatives and goals—by some companies and investment product providers. There are ways, though, to differentiate between true ESG investments and those hiding behind marketing hype.

Avoiding greenwashing: how to navigate the buzzwords and marketing spin

The term ESG (environmental, social, and governance) has become commonplace in headlines over the past year. An increasing number of investors are considering ESG in the context of their portfolio: what type of risk are their investments exposed to; and how do their holdings support workers, suppliers, the surrounding community, and the planet overall?

The investment risks posed by resource scarcity

Unbridled increases in resources are not realistic, as evidenced by drought conditions, food deserts in urban areas, and entire regions that have been destabilized by a lack of naturally occurring materials. The markets in which we invest, however, reflect the hope of continued growth.

Extreme weather and the portfolio

Extreme weather events can have a significant impact on the entire economic ecosystem, from individual companies to their supply chains to the broader financial markets. What used to be isolated “100-year storms” are now routine—a direct result of climate change, which is becoming a key consideration for investors.

Beyond Negative and Positive Screens

In thinking about funds and portfolios with a social or environmental focus, it’s tempting to imagine their managers as being akin to nightclub bouncers: “Good” companies are welcome, while “bad” ones are turned away.

How ESG Managers Are Closing the Performance Gap

Still concerned that investing with an Environmental, Social and Governance (ESG) lens means sacrificing returns? It’s time to turn the page on that myth. Exchange-traded funds (ETFs) that use environmental, social and governance (ESG) factors to help select U.S. stocks did very well in 2021. Of the 10 largest such funds, seven beat the S&P 500 index.