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What Do You Value: A Guide To ESG Investing

Updated: Sep 1, 2021

Environmental Social Government (ESG) funds are investment funds that base their stock picks not only on performance but restrain them to “socially responsible” companies. ESG funds can include a spectrum of potential concerns including companies that fight racial injustice by prioritizing representation of minorities among their employees, or include women in leadership positions, or use climate forward practices, or even companies that do not sell tobacco or marijuana as a product. Seeing companies make choices that align with an investor's value scan often make investors feel much better about their investing because when these funds are run properly investors are profiting when good (generally speaking) business practices are successful.

Unlike investing in other funds where the goal is simply to make the most money, ESG investing brings in the idea of moral and ethical priorities where investors want to invest into funds or businesses which reflect the investor's values beyond just profits. ESG investing is a quickly growing sector of funds, providing evidence that people like the ability to tailor their investments to their values. In the past decade alone the number of ESG funds has quadrupled to almost 400 funds total.

Even more interesting, not all of these ESG funds are new funds; some are repurposed or reused funds now being framed as ESG presumably to increase their popularity. In 2020, an all-time high of 25 funds were repurposed that year to be ESG.