How does ESG investment work?

  • In general, ESG (Environmental, Social, Governance) funds prefer to invest in companies that are screened for environmental, social or governance criteria.
  • It is best to choose ESG funds that are most consistent with your investment goals.
  • ESG benefits can be both financial and personal.
  • Our ESG funding offer incorporates Vanguard’s policies for investment success.

You’ve probably thought about investing in industries like technology or real estate, but what about your investments? Value?

Many investors seek to align their policies such as clean air or ethical business practices as their assets grow. ESG investing gives you the opportunity to choose investments based on your personal values.

What is ESG Investment?

ESG funds allow you to invest in companies or industries that meet certain criteria. These criteria are classified as environmental, social, or governance-based. For example *:

  • Environmental: How a company or industry works as a steward of the natural environment.
  • Social: How a company manages relationships with its employees, suppliers, clients and the community.
  • Rule: How a company’s board and leadership manages executive salaries and shareholder rights.

While this is not a new option, such investments are growing in popularity.

ESG strategy *

There are several ways to invest in ESG. For example, some funds practice Investment screening, Which excludes certain sectors or securities or sectors or companies with higher ESG ratings than their industry peers. Read more about Vanguard’s approach to ESG investing.

Benefits of ESG funds

These funds came because more people wanted investment options that satisfied both their financial goals and personal value. For example, Vanguard ESG International Stock ETF This can be a good option if you are looking for international exposure but want to avoid investing in tobacco companies. Our study did not find any discrepancy in the return of ESG and non-ESG funds. **

Hand filled gas tank

Historically, investors had to ‘verify their value at the door’ in the case of their investments. Today, there are high quality products that allow people to get peace of mind about what they have invested without compromising their investment strategy.

– Carl Ozek, Senior Wealth Advisor with Vanguard Personal Advisory Services:

Women with children

ESG and your portfolio

It is best to choose a fund that will help you meet your long-term goals. ESG investments are all or nothing-some investors use ESG funds in some part of their portfolio but stop changing their entire lineup. With an ESG ETF (Exchange-Traded Fund), you can start investing in ESG at the cost of just one share. Use the method you will use with other funds – consider whether the fund fits your investment strategy and goals.

Our ESG offer

Vanguard adopts the same investment policy across all of our products – with clear goals, wide diversity, low cost and long-term outlook. Our and our ESG funds are no exception. They are part of our sustainable investment story. Our ESG lineup includes mutual funds and ETFs, as well as active and passive management styles. With our ESG product offer, you don’t have to compromise on diversity.

“Vanguard has been providing ESG funding for over 20 years. We believe that anyone interested in disclosing personal value through investment decisions is tolerating investment options, ”said Caitlin Coughlin, Head of Vanguard Portfolio Review.

More than 30 million investors worldwide look to us to protect and grow their investments, a responsibility we do not take lightly. We are dedicated to your best interests and would like to give you the best chance of investment success. The lineup of our ESG funds is another way that we are supporting you.

* These are examples of common strategies and criteria that can be used for ESG investing. Advisers to the Vanguard ESG Fund cannot apply these same strategies or criteria.

** Source: John-Carl Plague and Douglas Grimm, 2020. Have investors paid for the performance? Examine the behavior of ESG equity funds.


For more information about vanguard funds, visit to get a prospectus or, if available, a summary prospectus. The prospectus contains investment objectives, risks, charges, expenses and other important information about a fund; Read and consider carefully before investing.

All investments are at risk, including the potential loss of money you invest.

Diversity does not guarantee gain or protect from loss.

ESG funds cover the risk of investing in ESG, which means that the stocks or bonds displayed by the index sponsor for the ESG criteria will generally show less to the market or selected specific stocks or bonds, as a whole, of other funds verified for the ESG criteria.

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