Ethical investing has seen a boom in popularity over the past year with savers piling into so-called environmental, social and governance or ‘ESG’ funds.
In Europe, 290 ESG-oriented funds were launched last year while in the US, total assets under management in sustainable investments more than doubled from approximately $40billion (£32.5billion) in 2013 to almost $90billion (£73billion) by the end of 2018.
Though they share an overall objective to make a positive impact, ESG funds have different focuses and objectives, with some targeting climate change while others look to invest in socially responsible companies. Some merely exclude particular sectors such as tobacco and firearms, while water funds have become increasingly popular. Recently however, several funds have launched with a broader ethical focus, based on the new United Nations’ Sustainable Development Goals, or SDGs.
The Sustainable Development Goals are a call for action to promote prosperity while protecting the planet and include things such as stamping out poverty, improving access to healthcare, clean water and affordable clean energy and tackling social and gender inequality. They officially came into force on 1 January 2016 – following the 2030 Agenda for Sustainable Development held the previous September.
Over the next 15 years, UN countries will aim to achieve these goals with a unified effort to end all forms of poverty. In turn, this global campaign has inspired a number of fund houses to expand their ethical range with the SDGs in mind.