What's going on?

A new report this week from Goldman Sachs examines exactly what stocks �sustainable� funds pick � and it seems investors increasingly want to use their powers for good.

What does this mean?

Since 2016, more than $8 trillion has flooded into �ESG� funds, which make investment decisions based on environmental, social, and governance factors. Their most popular investment is, unsurprisingly, one of the world�s biggest firms: Alphabet.

But investment bank Goldman looked into which companies are relatively popular compared to their size: the stocks that ESG funds favor more than other investors. It found there�s a big focus on �impact�: companies actually trying to make the world better, as opposed to doing the same old stuff in a slightly more ethical way. Foremost among these is French firm Suez, which builds wastewater treatment facilities.

Why should I care?

For markets: Joining the Justice League.
Impact investing�s growing popularity could be explained by an increased desire to back positive planetary change. And investors may make more money by doing so. Impact-focused companies have huge growth potential: as water becomes more scarce, for example, we�ll likely need more recycling treatment plants. In order to meet the Paris Agreement�s climate change targets, it�s estimated that $7 trillion a year will need to be spent on upgrading infrastructure � money that�ll flow to those companies offering sustainable solutions.


For you personally: On my world it means hope.
If you�re one of the many people drawn to sustainable investing, you might have assumed you were already funding impact like this. But that�s not necessarily the case: most ESG assets are in �exclusionary� funds, which merely avoid damaging sectors like tobacco and weapons. One reason for this disconnect is that there are currently no universally accepted definitions of what makes a fund �sustainable� or �green�. That�s set to change, however: the European Union is shortly planning to regulate how ESG funds brand themselves.