While the Morningstar’s sustainable fund index is a great starting point for new investors, it may not be the best option for every portfolio. For instance, it ranked 27% of ESG funds as “sustainable,” which means that they had little to no difference from other funds. Morningstar subsequently revised this figure to $1.2tn. For those who are concerned about the environmental impact of their investments, it’s worth reading this list from start to finish.
While the SFDR aims to reduce “greenwashing”, the list of European sustainable funds still includes nearly four thousand funds. But, the list has been shrinking since December 2017. That’s because Morningstar has found examples of asset managers marketing their funds as promoting “ESG characteristics” in their literature, even if they haven’t made any changes to their investment strategy or portfolio.
This investment fund is led by veteran Steve Liberatore, who heads the firm’s ESG efforts. His team of over a hundred investment professionals and a 28-person ESG team ranks every investment using a proprietary ESG framework. The fund’s investments are largely focused on the top performers, while the remainder is dedicated to impact investments (bonds issued to finance projects with measurable social and environmental impact).