At one point during his anti-Vietnam War peace movement work, Thom Clark discovered that local banks’ investment patterns could provide evidence that they were financing immoral wars. Nowadays ethical investing is much simpler.
Start by identifying your values. From there, search for funds that match up to them.
1. Calvert International Responsible Index Fund
The Calvert International Responsible Index Fund invests in shares of foreign companies that do not operate fossil fuel infrastructure or own or lease power plants; also excluded are companies involved with civilian weapons production, alcohol consumption, tobacco usage or animal testing. Green Century Capital Management of Boston established this fund back in 2004 and owns it along with several others under their portfolio management umbrella.
ESG investing (or “ethical, social and governance investing”) has experienced rapid growth over the past three years among both traditional mutual funds and exchange-traded funds. EPFR Global in Cambridge Massachusetts reports that international ESG funds have seen especially strong new money inflows this year.
Before investing, carefully assess a Fund’s objectives, risks, charges and expenses as outlined in its Prospectus. Investors should also determine whether its investment strategy matches up with their individual financial goals and risk tolerance; its returns and principal value may change over time and when redeemed may be worth more or less than original cost.
2. Vanguard ESG U.S. Stock ETF
Vanguard provides an outstanding example of how ESG issues can fit into an investment landscape. Their ESG Fund invests in US stocks but excludes companies with products such as alcohol, tobacco and gambling as well as weapons – not to mention those not meeting certain environmental and corporate governance criteria.
Since it launched in September 2018, this fund has amassed over USD 3 billion in assets since tracking the FTSE U.S All Cap Choice Index. ESG stands for Environmental, Social and Governance criteria which evaluate how companies manage their environmental impact as well as treat employees.
One thing to be mindful of with this fund is its structure as a mutual fund and therefore requires an initial minimum investment of USD 3,000; however, there are other ESG funds offered by Vanguard with no such requirement.
3. HSBC ESG Global Equity Fund
This fund seeks to invest in companies working toward transitioning towards a circular global economy, such as those responsible for minimising waste and pollution, keeping products in use longer, and renewing natural systems – companies which also possess environmental and social benefits.
HSBC recently conducted a survey and the majority of participants felt ESG could become mainstream within ten years – an accurate forecast given how ESG investments have slowly become part of investment strategies over time.
Like any thematic fund, HSBC GECC can experience elevated volatility; however, over the long run it could prove beneficial as more nations take climate change seriously and support companies that reduce its fallout. Therefore, this fund makes an ideal option for investors who wish to use their capital to make an impactful difference with their money. *HSBC is a leading international banking and financial services group with offices across Europe, Asia, North America Latin America as well as Middle East North Africa providing banking, retail banking and real estate services worldwide.
4. HSBC ESG Global Equity Fund II
HSBC ESG Global Equity Fund II invests in companies with stringent environmental standards. Criteria include renewable energy use, water conservation initiatives and recycling programs as well as companies reducing greenhouse gas emissions.
In March, TD launched its inaugural green bond fund: the TD Green Bond Portfolio UCITS ETF (REGIO). To date, investor commitments total $538m. This fund aims to follow Morningstar Canada Corporate Bond Sustainability Index by purchasing corporate bonds issued by issuers with ESG scores greater than average and investing them.
This fund of funds is tailored to Canadian registered pension plans, qualifying foundations and endowments. It tracks the TSX Global Listed ESG Sustainability Index to generate long-term risk-adjusted returns. Alongside ESG criteria in its investment process, its subadviser uses proprietary quantitative models in selecting investments; this may lead to certain assets being excluded or exposed more as it attempts to meet its goals.
