What is sustainable investing?

Aerial view of a farmer tending rows of green crops and flowers

Sustainable investing means aiming for a competitive return and a positive impact on people and the planet, both at the same time.

Watch: What is sustainable investing? (6 min)

How sustainable investing works

Sustainable investing pursues two goals at the same time. The first goal is a competitive return. The second goal is a positive impact on people and the planet.

A simple example is a fund that excludes coal producers. The fund drops companies that earn revenue from mining coal. It still has to compete on return with other funds in its category.

For the main strategies investors use, see the Ziggma Sustainable Investing Guide.

Sustainable investing vs ESG investing vs impact investing

ESG investing and impact investing both carry the sustainable label, but they measure different things. ESG investing relies on aggregate third-party risk ratings from MSCI and Sustainalytics. Those ratings measure how sustainability issues affect the company, not the company's real-world outcomes. Impact investing looks at outcomes at the holding level, such as each company's carbon footprint. Ziggma's explainer on ESG vs impact investing covers the difference in detail.

Does sustainable investing cost returns?

The long-run evidence says it does not have to. The Clean200, a list of 200 public companies ranked by clean-economy revenue from Corporate Knights and As You Sow, returned 282.9% from July 2016 to January 2026. The MSCI ACWI returned 221.3% over the same period. Research by Schroders and Oxford Saïd Business School found annualized alpha above 9% in some back-tested impact portfolios. Past returns do not guarantee future results. For the full evidence, see do ESG funds outperform?

How to spot greenwashing

Greenwashing is when a fund looks more sustainable than its holdings are. Fund names are unreliable. A "Low Carbon" or "ESG" label does not guarantee the fund excludes fossil fuel companies. The reliable check is what the fund owns and how much revenue those companies earn from harmful activities. Ziggma's guide on how to spot greenwashing in your portfolio walks through the checks.

Where to go next

For the main strategies and how to start, read the Ziggma Sustainable Investing Guide.

To compare research platforms, see the best platforms for sustainable investing.

To see where your own portfolio stands, run a free Ziggma Portfolio Checkup.

Frequently asked questions

Sustainable investing means aiming for a competitive return and a positive impact on people and the planet, both at the same time. Investors pursue both goals through the companies and funds they choose to own.

No. ESG investing relies on aggregate risk ratings from MSCI and Sustainalytics. Those ratings measure how sustainability issues affect a company, not the company's real-world impact on people and the planet.

Not exactly. Sustainable investing is the goal of a competitive return plus a positive impact. Impact investing is the method that checks the impact half, holding by holding, with outcome data such as each company's carbon footprint.

Not according to the long-run evidence. The Clean200 list from Corporate Knights and As You Sow returned 282.9% from July 2016 to January 2026, against 221.3% for the MSCI ACWI. Past returns do not guarantee future results.

Greenwashing is when a fund or company presents itself as more sustainable than its holdings or operations show. Fund names are an unreliable guide. The check is what a fund actually owns and how much revenue those companies earn from harmful activities.