Passive and Sustainable

Passive and Sustainable? | Seeking Alpha
July 6th, 2016

Morningstar's new scheme evaluates how well a fund's investments follow environmental, social and governance ("ESG") best practices. ESG, with its middle name ("social"), is often mistaken for "socially responsible investing" (SRI), an investment style characterized by chronic underperformance. SRI is essentially passive. ESG investing can be more active in the sense that it seeks out those companies engaged in best practices around a host of environmental or governance concerns that should, theoretically, lead to better business performance.