Sustainable investing is about more than doing good – it's about building a future you believe in.
Sustainable investing, sometimes called socially responsible investing (or SRI), means making investment choices that consider both financial returns and the impact on the world. It focuses on supporting companies that are committed to ethical practices, environmental responsibility, and social good. These are companies that aim to do the right thing — and still grow.
This Earth Day, let’s clear up some common myths about sustainable investing. Whether you’re just getting started or thinking about how your values line up with your financial future, we’ve got you covered.
Myth 1: Sustainable Investing Is Just About The Environment
Not True
Sustainable investing isn’t just about clean oceans or wind farms. It’s about choosing investments that reflect what matters to you.
That includes companies that treat their workers fairly, support diverse leadership, protect your data, and make smart, ethical decisions. These things fall under what’s called ESG — Environmental, Social, and Governance. The “E” gets a lot of attention, but the “S” and “G” matter just as much. Whether you care about human rights, privacy, or boardroom diversity — ESG has it covered. So if you're thinking long-term, sustainable investing may help you grow your retirement savings and stay true to your values.
Myth 2: ESG Scores Are Always Reliable
Not Exactly
ESG scores help show how responsibly a company behaves — but they’re not one-size-fits-all.
There’s no universal system for calculating a company’s social responsibility, so different agencies may use different methods. Some rely on data from public reports, such as those conducted by the EPA. While others may base their scores on direct conversations with company leaders. This means a company could have a high score from one provider and a much lower score from another. The most relevant ESG rating agencies and data providers include Bloomberg ESG Data, MSCI ESG Research and Sustainalytics.
That said, ESG scores are still valuable but they’re just one piece of the puzzle. If you're considering sustainable investments for your retirement, take a look at how the scores are calculated, what they focus on, and make sure to do a bit of your own research too.
Myth 3: Sustainable Investments Always Underperform Traditional Ones
Not Entirely Accurate
A common misconception about sustainable investing is that it means giving up on good returns, but that’s not the case.
In fact, research shows that investments that factor in Environmental, Social, and Governance (ESG) considerations can perform just as well as, sometimes even better than traditional investments. One study by Robeco found that sustainability data had a positive impact on returns in about 38% of cases. That’s not a guarantee (nothing in investing ever is), but it does challenge the idea that sustainable investing means accepting lower returns.
