The latest Good Investment Review finds that sustainable funds – those that make a positive difference to people and planet, as well as aiming for profit – have outperformed their traditional peers on average over the last five years.
Since 2017, the ethical UK equity funds monitored in the review have brought average returns of 32.3 per cent compared with 25.2 per cent for all funds in the sector. Meanwhile, the ethical global equity funds monitored have returned an average of 77.4 per cent compared with 62.3 per cent for the sector.
How to avoid greenwash
The April 2022 review from Good With Money and Square Mile Research focusses on the growing problem of greenwash. It says that with increased public concern about climate change and human rights, there has been a flurry of responsible funds being launched or “repurposed” in order to be labelled as responsible or sustainable.
It adds: “Whilst this is ultimately a positive step forward, it does create the challenge of unpicking the plethora of funds on offer to understand if they are delivering on both their financial and non-financial outcomes.”
The review looks at the steps investors can take to avoid greenwash and find genuinely sustainable funds, and how the industry can offer greater transparency on how investments are acting as a force for good.
It also includes essential commentary from key sponsors including:
- BNY Mellon Investment Management: Five things to know about Responsible Investment
- Federated Hermes: Investing in a net zero future
- Fidelity: A net zero future demands real action now
- Good With Money: Investing for good, without the greenwash
- Jupiter Asset Management: Environmental risks dominate the outlook for the next decade
- Liontrust: Five ways to avoid greenwashing
- M&G Investments: Measuring the positive impact of an investment
- Rathbones: A multi-asset approach to sustainability
- Regnan: Liquid Biopsy
- Sarasin & Partners: Not as green as it seems
- Schroders: Beyond Profit
- Wellington Investment Management: Evaluating labelled bonds
The review rates funds that have an ethical or sustainable approach according to the extent to which they “do good, avoid doing harm and lead change”.