Mutual Fund Industry Tries to Figure Out How to Define ESG Funds

The Investment Company Institute, the leading trade association for U.S. mutual fund companies, is racing to define ESG investing to help consumers understand more broadly what they are actually getting from the sustainable and socially responsible funds.

Whether it is fossil free, low carbon, ethical, sustainable, gender-focused or impact-tilted, ESG funds have a wide variety of themes and strategies. Mutual fund companies say that has led to some confusion when an investor goes to buy a fund. An ethical fund might include some oil companies, or a low-carbon fund could make an exception for clean coal.