2 Things to Beware With ESG Fund Investing

If you want to invest in companies that share your values, consider environmental, social, and governance (ESG) funds. They aim to invest in companies that are overall environmentally friendly, socially responsible, and ethically governed. That sounds great – but before you jump into investing in ESG funds, you'll need to confront some key risks.

Some companies may not be living up to their stated ESG principles. One analysis by the climate-change think tank InfluenceMap found that 71% of ESG equity funds invest in companies that fall short ofwhen it comes to aligning with The Paris Agreement, a legally -binding UN treaty which calls on countries to reduce greenhouse gas emissions. 

But that's not to say there aren't a few gems in the mix. The InfluenceMap study found that the funds it analyzed have Portfolio Paris Alignment scores ranging from -42% to +90%.

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Source Fool.com