Performance Implications of Sustainable Investing

This chapter in-vestigates the financial and social performance of sustainable investing and discusses specific da-ta concerns for measuring performance. The bulk of the chapter examines the financial perfor-mance of sustainable investing compared to traditional investing for different strategies and as-set classes, including equity funds, index funds, fixed-income funds, and even funds focused on “sin” stocks. Overall, the evidence suggests that sustainable investing does not underperform traditional investing and may slightly outperform under certain circumstances. The chapter also explores the social performance of sustainable investing and whether it affects our society and planet. Most sustainable investors want a competitive financial return and an impactful social return. The chapter aims to provide an easy-to-digest menu of performance topics and let investors decide if they can have their cake and eat it too.