A sustainability fund is a mutual fund that integrates non-financial criteria into the investment analysis and the decision-making process.
Non-financial criteria are environmental, social and governance (ESG) factors that go beyond the ones considered in the traditional financial analysis.
Fund managers define a sustainability strategy that describes how the consideration of environmental, social and governance factors will be integrated in their investment process. It should result in a portfolio with clear sustainability added value with respect to asset selection (companies, sectors and countries).
Funds that focus on a single or very few sustainability criteria are not considered as they are not competitive in an increasingly diverse and sophisticated sustainability market.
Investment in sustainability funds or companies, according to several studies, outperforms or at least matches the performance of traditional investment.