People often swap out terms like ‘sustainable’, ‘ethical’, ‘SRI (socially responsible / sustainable and responsible investing)’ and ‘ESG’ (environmental, social and governance) for each other. But while there is overlap, these terms were coined originally to lead to slightly different investment decisions.
ESG originated from investors wanting to reduce investment risk by researching how companies manage the environmental, social and governance issues that are relevant to their businesses. Sustainable investment was originally concerned with helping to shape a greener, more sustainable future. And ethical investment is an older term which strived to bring personal values into investment decision-making.
Fidelity’s ESG spectrum incorporates both ethical and sustainable investing.