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Advisor Insights

Integrating Sustainable Investing: Defining Client Goals

Investors are driven by one of two broad motivations: improving the world or improving investment results--or a blend of both.

The following article is part one of a series of excerpts from the Morningstar research report, "Integrating ESG Into Your Client's Portfolio," available to Morningstar Office and Direct clients here.

As with any other aspect of financial planning, when it comes to environmental, social, and governance investing, it is important to establish goals at the outset. Without a clear vision for an investor’s desired ESG outcomes in a portfolio, it is very difficult to determine which types and degrees of change to introduce. This difficulty is compounded by the fact that no commonly agreed upon set of terms and definitions currently exists. Morningstar is developing its own taxonomy and tools to assist advisors and investors in making these kinds of assessments. Advisors may have access to such tools from their own firms or other third-party providers. But even short of refined tools, we can set out some broader definitions as a guide.