Will an emphasis on materiality, or financial relevance, help sustainable funds?
Sustainable investing has been in the doldrums for three years, dismissed as “woke investing,” and its themes, including institutional diversity, equity, and inclusion practices, renewable energy, and electric vehicles, have been targeted by the Donald Trump administration. Many sustainable funds have also been poor performers, though lately, that’s started to turn.
Source: Morningstar Direct. Data as of March 2025.
One big source of criticism: The term “sustainable investing” is too big of a tent. It includes both people who want do good through their investments (so-called values-based investors) and people who want to avoid environmental, social, and governance risk, including some conventional investors. Money managers tried to straddle that uneasy divide without explaining themselves to…
