Definition
Performance
Asset Growth
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.
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.
Annual Total Return (%)
Sustainable Index Funds |
|||
|---|---|---|---|
| S&P 500 (SPY) |
Vanguard FTSE Social Index (VFTNX) |
Calvert Large Cap Index (CISIX) | |
| 2023 | 26.19 | 31.78 | 27.26 |
| 2022 | -18.17 | -24.20 | -21.66 |
| 2021 | 28.71 | 27.77 | 25.62 |
| 2020 | 18.40 | 22.66 | 26.11 |
| 2019 | 31.49 | 33.96 | 32.82 |
| 2018 | -4.38 | -3.38 | -4.07 |
| 2017 | 21.83 | 24.19 | 21.18 |
| 2016 | 11.96 | 10.34 | 10.71 |
| 2015 | 1.38 | 1.27 | 1.14 |
| 2014 | 13.69 | 15.85 | 14.41 |
Past performance is not a guarantee of future results.
* For further reading on the performance of sustainable investing: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.
“The idea that sustainable investing is a recipe for underperformance is a myth.”– Morningstar
“We believe ESG analysis is essential for a company to sustain competitive advantage.”– Morgan Stanley
“Responsible Investing: Delivering competitive performance…while pursuing social goals."– TIAA-CREF
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 $16.6 trillion in 2020 –an astonishing increase from merely $639 billion in 1995.*
Although much of the increase is attributable to institutional investors, an overwhelming majority of women and younger investors are transforming the investing landscape by demanding investments that go beyond the traditional financial metrics and include ESG factors. *Report on US sustainable and impact investing trends 2020, U.S Social Investment Forum, 2020
% of investors that consider social, political, and/or environmental factors when making an investment decision
Women
Gen X
Millenials
High Net Worth
Investors
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