• Top 3 FAQs

YOUR QUESTIONS ANSWERED

What does it mean to invest sustainably?

Definition

How does performance compare to the broader stock market?

Performance

How popular is sustainable investing?

Asset Growth

Definition

What does it mean to invest sustainably?

Sustainable investing is a proactive investment approach that goes beyond traditional financial analysis and includes the environmental, social, and governance (ESG) practices of a company.

The Tools of Sustainable Investing

Positive Screening: The preferential selection of companies with strong ESG performance relative to their peers—also known as best-in-class screening.

Negative Screening: The exclusion of companies or sectors based on specific ESG criteria such as tobacco, weapons, fossil fuels, or nuclear energy.

Active Ownership: Engaging a company as a shareholder, either formally through resolutions and proxy voting, or informally through direct dialogue.

Thematic Investing: Selecting investments based on a specific theme such as renewable energy, water conservation, and women’s rights.

Community Investing: Investing capital directly into banking and lending institutions that serve low-income and underserved communities.

S&P 500 vs. Sustainable Index Funds

graph
graph
2005
2016
  • S&P 500
  • Vanguard FTSE Social Index (VFTNX)
  • Calvert US Large Cap Responsible Index (CISIX)

Annual Total Return (%)

Sustainable Index Funds
S&P 500 Vanguard FTSE
Social Index
Calvert Large Cap Index
2016 11.97 10.34 10.71
2015 1.4 1.3 1.1
2014 13.5 14.4 15.9
2013 32.2 35.0 37.1
2012 15.9 17.7 17.8
2011 2.1 0.1 0.5
2010 14.8 13.7 14.6
2009 25.9 34.8 35.3
2008 -36.6 -39.7 -42.3
2007 5.5 3.2 -2.2
2006 15.6 11.9 13.4
Past performance is not a guarantee of future results.

Performance

How does performance compare to the broader stock market?

Academic and Wall Street* studies have shown a growing relationship between environmental, social, and governance (ESG) practices and superior long-term individual stock performance. But does this competitive performance hold true for a basket (index) of sustainable stocks?

To find out, we compared the performance of the S&P 500 against two sustainable fund indexes: the Calvert Social Index and the Vanguard FTSE Social Index. Although all three indexes invest passively in the overall stock market, the companies selected by the sustainable indexes also meet strict environmental, social, and corporate governance (ESG) standards.

“With performance results being roughly equal, it boils down to one question: Do you want your investments to have the potential to help the planet?”
“Investing in sustainability has usually met, and often exceeded, the performance of comparable traditional investments.”
“Responsible Investing: Delivering competitive performance…while pursuing social goals."
* For further reading on the performance of sustainable investing:

ESG Investing Going Mainstream, U.S. Trust

Sustainable Reality: Understanding the Performance of Sustainable Investment Strategies, Morgan Stanley

Responsible Investing: Delivering Competitive Performance, TIAA-CREF

Asset Growth

How popular is sustainable investing?

From large state pensions to university endowments to ordinary citizens, investors share a common desire to invest in a sustainable way. In the U.S. alone, sustainable investing has become one of the fastest-growing investment trends, with overall assets exceeding $6.5 trillion in 2014—a ten-fold increase since 1995.*

It’s interesting to note that while sustainable investing themes are important factors for many investors, surveys show that it’s wealthy investors, women, and younger people in particular that are driving this trend.

*Social Investment Forum, 2014 Report on U.S. Sustainable, Responsible and Impact Investing Trends.

% of investors that consider social, political, and/or environmental factors when making an investment decision

All

Women

Millenials

Investors with
> $10 million

Source: U.S. Trust.

Life has compromises, investing shouldn’t be one.

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