What is ESG Investing?

Sustainable investing may play a role in your finances. Learn more.

Whether you’re passionate about protecting the rain forest or ensuring social justice, you can use your personal beliefs to choose investment options that can help you achieve a more financially secure future. Over the last few years, you may have heard the term ESG (Environmental, Social, Governance) investing. This may be used interchangeably or in tandem with the words sustainable, socially responsible, green or impact investing. All these descriptors are used to mean the same thing: investing money in companies or funds that align with one or more ESG factors that are important to you.

ESG investment strategies consider an investment’s potential environmental and social impact as part of the selection process

ESG criteria can be reflective of a variety of philosophical views. The environmental component can range from issues like how a company’s business practices affect natural resources to mitigation of pollution. The social aspect may take into consideration issues such as diversity in the workplace and consumer privacy. Governance criteria can include issues like how a company manages its business ethics, shareholder rights and internal controls, among others.

More and more, investors want to see their investment portfolios guided by their moral compass. In 2020, ESG funds in the U.S. had net flows of $51.1 billion, more than double the total for 2019 and 10 times more than in 2018.* Of course, ESG investing seeks not only to align investments with philosophical views, but also to manage investment risks and enhance portfolio performance like any other investment strategy.

To learn more, watch the Mutual of America Financial Group Webinar, The Rising Tide of ESG Investing.

For questions about your retirement plan, contact your local Mutual of America representative today.

*A Broken Record: Flows for U.S. Sustainable Funds Again Reach New Heights. Morningstar. January 2021.

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