Sustainable investing: A socially conscious approach to investing

What is sustainable investing?

Sustainable investing enables you to invest your money in a socially conscious way according to your personal preferences and values.

Interest in sustainable investing has grown in recent years due in part to heightened investor demand, increased corporate awareness and greater investment product availability. As a result, many companies are elevating their business practices and policies to be more in line with environmental, social and governance (ESG) factors to meet this demand and help ensure market resilience in an ever-changing economic environment.

Whether you want to encourage better corporate behaviour, make a positive impact on the environment and society, or align your personal views with your portfolio, there are options that can help you achieve your goals. As always, it’s important to work with your financial advisor to determine the best approach to meet your unique needs.

Understanding ESG considerations

Sustainable investing incorporates environmental, social and governance or "ESG" considerations in the investment decision. Let's look at some examples of ESG factors and what companies can do to better align themselves with these considerations:


Environmental	Considerations include climate change, natural resource use and pollution. Companies can reduce carbon emissions, invest in renewable energy, decrease materials waste or conserve water resources to reduce environmental risks. They may also innovate environmental solutions that create business opportunities.
Social	Considerations include workforce well-being, product liability and social inequalities. Companies can advance gender pay equality, prioritize diversity and inclusion, foster positive labour relations, provide safe working conditions for employees and build strong cybersecurity systems.
Governance	Considerations include corporate governance and corporate behaviour. Companies can institute stronger ethics policies, provide transparency in their financial reporting and set accounting policies that reflect the state of the business.

What are my sustainable investment options?

Many professionally managed investments, such as mutual funds and exchange-traded funds (ETFs), incorporate ESG considerations into their process. They may do this by integrating it as one part of the overarching investment process, or they might have a primary and intentional focus on ESG.

Traditional funds may choose to integrate ESG considerations only to the extent it is financially material to the investment decision. These fund managers continue to prioritize financial return over ESG considerations. Importantly, these investments may not be marketed and viewed as sustainable investments.

Sustainable investing options at Edward Jones could include ESG intentional funds or a sustainable thematic and impact strategy, defined as follows.

If you want to invest in companies that have “best-in-class” ESG practices or encourage companies to improve their policies, you may want to consider an ESG intentional strategy.
With these strategies, you can invest in individual companies that meet the ESG standards you are looking for or invest in an ESG intentional fund. With ESG intentional funds, fund managers evaluate companies’ ESG policies and practices as part of the investment decision along with, but not ahead of, financial performance considerations. These funds tend to be broadly diversified across industries and sectors and prioritize a common set of ESG considerations.

Like traditional funds, ESG intentional funds perform differently depending on various factors such as the investment team’s skill, the strength of the investment process and the fund’s internal expenses. Additionally, because ESG intentional funds also focus on financial return and diversification, they should perform similarly to traditional fund strategies.

This chart shows that, from 2007 to 2023, leading ESG companies have performed in line with the global equity index.

Source:Morningstar Direct. Index performance measured from 10/1/2007 to 12/31/2023. The Global Equity Index is represented by the MSCI ACWI NR index and Leading ESG Companies is represented by the MSCI ACWI ESG Leaders NR index. Indexes are unmanaged and not available for direct investment. Past performance is not a guarantee of future results. Chart description

How you can take action now

If you are interested in incorporating more sustainable investing strategies into your overall financial strategy, talk to your financial advisor to determine whether sustainable investing is right for you.

What you need to know

The decision to incorporate your nonfinancial goals into your financial objectives is a personal choice.
Make sure the goals and objectives of a sustainable investment align with your expectations. Your financial advisor can help you understand any potential trade-offs so you can decide what’s right for you.