- Responsible investment strategies involve a trade-off between returns and ethical and environmental outcomes
- ESG funds can deploy a range of different strategies
- Regulation of the labels used is increasing, but for now it's difficult for investors to get clarity
Investors who want to take responsible factors into account when selecting funds face the tricky task of understanding what terms like sustainability, impact, and environmental, social and governance (ESG) mean, and how they are applied in practice by fund managers.
Given the volume of contradictory language and interpretations in the space, it is not a job for the faint of heart. But it can help to have an initial idea of the approaches one can encounter, before delving into the offerings available on the market.