Decoding Sustainable Investment Strategies - Bridging Intentions and Actions - Ayako Yasuda - ASWQ V3I2 - March 2025

This article explores the sustainability goals of fund managers categorized as financial, moral, or impact based on research using a BERT machine learning model trained on US mutual fund prospectuses. Financial goals focus on protecting portfolio value, moral goals reflect ethical values like avoiding harmful industries, and impact goals aim to drive positive societal or environmental change. The study finds that most US mutual funds pursue financial or moral goals, with impact funds being less common and smaller in size. Moral-financial hybrids are especially popular, as they are cost-effective and easier to align with financial returns. However, impact funds are more activist, supporting environmental and social proposals despite higher costs. The study suggests that ESG ratings, which emphasize financial relevance, may mislead investors seeking impact, potentially diverting capital away from meaningful change. The findings raise concerns about sustainable investing‚ ability to address global challenges without better measurement tools and greater investor commitment to impact.