7 Funds for Impact-Minded ESG Investors

Earth Week 2023: We found sustainability-themed funds with strong Medalist Ratings

Kate Lin 21 April, 2023 | 15:28
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It’s impossible to understate the severity of the current climate and resource crisis facing the world. 

Each year, we consume 1.6 planets’ worth of earth’s resources. That means, we are depleting natural resources faster than nature can replenish them. Moreover, the International Energy Agency estimates that annual investments in clean energy and infrastructure will need to more than triple by 2030 to around US$ 4 trillion, in order to set the world on a 1.5°C path.

Commitments and pledges are growing but they still fall short of what is needed to avert the worst effects of these overwhelming problems.

April 22 is the 53rd annual global Earth Day, a reminder for all individuals and corporations alike to transform words and promises into money and action.

Finding Thematic Products

Morningstar’s tools can help investors screen the funds best aligned to values. 

We screened for all funds for sale in Taiwan to find sustainability-themed investments that focus on one or more Morningstar Sustainable Attributes: Climate Action, Healthy Ecosystems, or Resource Security.

The screener yields seven funds that have Morningstar Analyst Ratings or medalist analyst or Morningstar Quantitative Ratings. The list has one ETF and two other index funds while the remaining are actively-managed, open-ended funds.

Among the 94 asset managers in the opportunity set, Impax by BNP Paribas Asset Management earns a Morningstar ESG Commitment Level of Leader, while Fidelity International earns a Basic rating.

Climate Play 

There are four funds that come under the climate action umbrella. Trends include carbon neutrality, green energy, and electric vehicles.

Furthermore, decarbonization, greenhouse gas emissions, climate change adaptation and mitigation, and climate solutions are some other sub-themes that climate action funds would pursue.

Invest to Secure Our Resources

Other than climate change, planet Earth feels the pain from another overwhelming problem: resource depletion following decades of accelerated urbanization and a rapidly growing population. This gives rise to initiatives and investment strategies to drive better natural resources, food, and waste management to ensure all living things can benefit from them now and in the future, sustainably.

Resource conservation is only one of the numerous ways to secure future resources. Themes sprawl from building on a circular economy to promoting better food and other waste management and recycling.Fidelity Sustainable Water & Waste Fund is an example that calls for financial capital to defend scarce resources, with a sharp focus on water and waste management. 

Healthy Ecosystems

Overconsumption of the Earth’s resources is also wreaking havoc on biodiversity.

The world cannot be sustainable without ecologically sound environments on land, air, and water for living things other than humans.

For instance, putting money into pollution reduction and remediation activities can positively impact the environment. Biodiversity, deforestation, life under water, natural ecosystems, planetary boundaries, planetary health, and sustainable agriculture are some of the focuses healthy ecosystems funds have.

Hua Nan Taiwan Environmental Sustainability and High Dividend Index Fund belongs to this theme.

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About Author

Kate Lin

Kate Lin  is an Editor for Morningstar Asia, and is based in Hong Kong

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