Funds that market themselves as sustainable investments aren’t necessarily focused on companies that fight climate change, develop wind turbines or promote diverse boards.
Instead, many of them look a lot like a portfolio of big technology stocks.
The five most commonly held S&P 500 stocks in actively managed sustainable equity funds last fall were Microsoft Corp., Alphabet Inc., Visa Inc., Apple Inc. and Cisco Systems Inc., according to an RBC Capital Markets analysis.
Companies focused on issues that the environmental, social and governance movement has come to be associated with, such as renewable energy, clean water, and racial and gender diversity, are relatively underrepresented among such funds. For instance, NextEra Energy Inc. is the world’s largest operator of wind and solar farms. It wasn’t on RBC’s list of widely owned stocks in ESG funds. But big tech companies like Amazon.com and Facebook are on the list.