Sustainability Matters

A Taxonomy of Sustainable Funds

Jon Hale, Ph.D., CFA

In my recent report on sustainable funds in the United States, I grouped the 351 open-end and exchange-traded funds into four types: ESG consideration, ESG integration, impact, and sustainable sector. (Morningstar Direct clients can find the report here.)

ESG consideration funds are those that refer to ESG criteria in their prospectuses as one set of factors that are considered in their investment process. Many of the 81 ESG consideration funds are older funds that have recently added ESG to their prospectuses.