Methodology

AskSustainable (AS) has established a definition of what it means to be a Climate-Friendly Investment: An investment where proceeds are used to fund activities and technologies that reduce harmful impacts to the climate or increase climate resiliency.

Currently, only products that are domiciled in the US and available to US investors are profiled, across three separate product categories: Depository Products, Impact Funds, and Pooled Funds (currently, ETFs are the only Pooled Funds featured on AS).

In general, there is a three-step process to identify whether a product is truly Climate-Friendly.

1. We review the full universe of investment product providers and identify product providers with commitments to climate-consciousness, climate or environmental impact, or sustainability. We then subsequently review each of the products offered at these providers to determine accessibility to the US market, and to confirm the presence of commitments to climate-consciousness, climate or environmental impact, or sustainability.
2. If a product is accessible to the US market and “green” commitments are present, we then evaluate the scope and depth of the commitment to climate action. This step in the process attempts to track the flow of dollars from investment placement to potential climate action.
3. Lastly, after procuring a general idea of how the product's Use of Proceeds align with its “green” commitments, we then confirm whether the projected flow of capital meets AS’s Climate-Friendly definition stated above.

To ensure complete and accurate information, when compiling a product profile, AS may directly engage with the product provider. Also, AS may consider individual product referrals submitted for review.

Please see below, for more in-depth knowledge on how products were selected within each product category.

AS initiated its search for Climate-Friendly Depository Products by reviewing approximately 230 unique financial institutions. The following criteria was used to determine this population of financial institutions: Green America Listings, Member of the Opportunity Finance Network, Member of the Global Alliance for Banking on Values, B-Corp Certification or pending B-Corp Certification, sustainability-oriented Community Development Financial Institution, and Signatory of the UN Principles for Responsible Banking.

These 230 financial institutions captured in the initial search, were then reviewed to determine retail investor access for US residents. 120 institutions were in scope for US retail investors. Each depository product offered at these institutions, was then analyzed in order to determine the presence of any "green" commitments.

The following key words were used as reference points, which indicated the marketing of “green” commitments: Green, Sustainable, Clean Energy, Environmentally-Friendly, Climate-Friendly, Solar, and Wind. The presence of these key words on provider websites or marketing materials, indicated the possibility of identifying a Climate-Friendly product.

Once the presence of a “green” commitment was confirmed, the commitment was studied to check for alignment with AS’s definition of a Climate-Friendly Investment.

As of November 2022, the AS database profiles 95 distinct Depository Products, across 21 unique institutions.

AS initiated its search for Climate-Friendly Impact Funds by reviewing approximately 600 unique Impact Funds. The following criteria was used to determine this population of Impact Funds: Green America Listings, Member of the Opportunity Finance Network, B-Corp Certification or pending B-Corp Certification, sustainability-oriented Community Development Loan Fund, and Signatory of the UN Principles for Responsible Investment.

These 600 Impact Funds captured in the initial search, were then each reviewed to determine if they had an active product available to US investors. 100 Impact Funds were in scope for US investors. Each investment product offered at these Impact Funds, was then analyzed in order to determine the presence of any "green" commitments.

The following key words were used as reference points, which indicated the marketing of “green” commitments: Green, Sustainable, Clean Energy, Environmentally-Friendly, Climate-Friendly, Solar, and Wind. The presence of these key words on provider websites or marketing materials, indicated the possibility of identifying a Climate-Friendly product.

Once the presence of a “green” commitment was confirmed, the commitment was studied to check for alignment with AS’s definition of a Climate-Friendly Investment.

As of November 2022, the AS database profiles 33 distinct Impact Fund products, across 27 unique institutions.

AS initiated its search for Climate-Friendly ETFs by reviewing approximately 160 unique funds. This population of ETFs was identified by the tagging of "ESG", either within the fund name or on fund marketing materials. These ETFs might have also met the following criteria: B-Corp Certification or pending B-Corp Certification, CDP member, Signatory of the Task Force on Climate-Related Financial Disclosures, and Signatory of the UN Principles for Responsible Investment.

These 160 ETFs captured in the initial search, were then reviewed to determine how the “Environmental” pillar of ESG played a role in fund management.

The following key words were used as reference points to indicate the presence of environmental factors within the fund’s investment scope: Green, Sustainable, Clean Energy, Environmentally-Friendly, Climate-Friendly, Solar, Wind, and Best-in-Class. The presence of these key words on product websites or marketing materials, indicated the possibility of identifying a Climate-Friendly product.

ETF product profiles can be segmented into two sections: Pure Play and Best-in-Class. Pure Play and Best-in-Class funds have clear pathways to understanding potential climate action stemming from investment placement.

Funds that either liquidated or withdrew the application of ESG within their investment objectives, were removed from the AS platform. In addition, funds that indicated the incorporation of ESG factors within their investment objectives, but did not specify exact environmental issues considered, were also removed from the AS platform.

As of November 2022, the AS database profiles 104 distinct ETFs, across 43 unique institutions.

The AS team initiated its search for Climate-Friendly Mutual Funds by reviewing approximately 300 unique Mutual Funds To determine this initial population of Mutual Funds, the team pulled all funds from: Bloomberg with "ESG" tagged either within the fund name or on fund marketing materials such as their fact sheets, prospectus, and impact reports. These Mutual Funds might have also met the following criteria: CDP Member, B-Corp, Task Force on Climate-Related Financial Disclosures, and the United Nations Principles for Responsible Investment.

These 300 Mutual Funds captured in the initial search, were then reviewed to determine how the “Environmental” pillar of ESG played a role in fund management.

The following keywords were used as reference points to indicate the presence of environmental factors within the fund’s investment scope: Green, Green Infrastructure, Carbon Reduction, Sustainable, Clean Energy, Environmentally-Friendly, Climate-Friendly, Solar, Wind, and Best in Class. The presence of these keywords on product websites or marketing materials, indicated the possibility of identifying a Climate-Friendly product.

Mutual Funds product profiles can be segmented into two sections: Pure Play and Best in Class. Pure Play and Best in Class funds have clear pathways to understanding potential climate action stemming from investment placement. Best in Class funds are funds that are environmental, social, and governance (ESG) leaders in their respective sectors. To be a Best in Class Mutual Fund featured on the AS platform, the funds must have an explicit “ranking hurdle” (a quantitative threshold of climate-impact used to select holdings for the fund.) Pure play funds are funds that invest in one specific sector or category, all their efforts and resources are concentrated in a single line of business, such as solar development or water-related activities.

Mutual Funds that either liquidated or withdrew the application of ESG within their investment objectives, are not included on the AS platform. In addition, funds that claim that they are Best in Class but do not have a specific ranking hurdle are not included on the AS platform and funds that do not specify exact environmental issues considered, are also not included on the AS platform.

The AS Team created the following ranking system for the funds we reviewed, which can now utilized be by AS users to search for products based on the level of climate impact of each fund. All funds are ranked using the following 1 (Low) - 5 (High) scale:.

1: Fossil fuel ban only, these funds whether they be pure play or best in class funds do not invest in any type of fossil fuel such as oil, coal, or natural gasses etc.

2: Best in Class only, these are the funds that are ESG leaders in their respective sectors.

3: Fossil fuel ban and Best in Class, these are best in class funds that do not invest in fossil fuels.

4: Climate related pure play funds- -these are pure play funds that invest in one or more of the following categories: sustainable energy, environmental conservation, sustainable transportation, sustainable construction, and other climate contributions.

5: Climate related pure play funds with a fossil fuel ban, the highest category on the scale. These are pure play funds that do not have any fossil fuel investments.

As of May 2023, the AS database profiles 111 distinct Mutual Fund products, across 53 unique institutions.