Green funds fall into a broader category known as “environmental, social and governance” investing. Investors interested in the ESG trend look at those three areas when deciding how to invest. The aim: Earn a good return on investment while supporting companies with strong track records in one or more areas.
Choosing an ESG fund that aligns well with your interests isn’t straightforward, though.
“I think it can be really hard to know where to start,” Fabian Willskytt, associate director of public markets at Align Impact, a financial advisory firm that specializes in values-based investing, previously told CNBC.
One way to start is by examining the asset manager, which serves as a good “shorthand” for investors, according to Willskytt at Align Impact.
Some firms are focused on ESG and have a long history of investing this way — both of which are encouraging signs for people serious about values-based investing, he said.
Investors can get a sense of a firm’s commitment by looking at its website and whether it displays ESG as a major focus, he added. From there, investors can pick from that firm’s available funds.
“It’s a definitely a red flag if you can only find the barest of [website] information,” said Jon Hale, director of sustainability research for the Americas at Sustainalytics, which is owned by Morningstar. “It suggests the commitment maybe isn’t as high as with other funds.”
Examples of ESG-focused firms include Calvert Research and Management and Impax Asset Management, Willskytt said. Nuveen, which is owned by TIAA, also has a relatively long track record of ESG investing, he added.
Keep reading at CNBC.
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