As the environmental, social, and governance (ESG) investing arena continues to witness exponential growth, the industry is also constantly evolving. As such, getting ESG exposure via large-cap investing could help offer peace of mind as the industry continues to expand.
That expansion of ESG has been in lockstep with investor sentiment when it comes to portfolios. While profitability is still top of mind, more investors are also introducing an ESG component into their investing criteria to ensure that their holdings are in line with their concerns, such as climate change.
“The concept of responsible investing is not new but has witnessed tremendous growth in recent years, fueled by rising consciousness around climate change,” a Mint article explained.
With growth, there also comes increased regulation. More watchdogs are ensuring that nobody is taking advantage of the ESG movement with the sole purpose of boosting profitability, hence the term “greenwashing.”
To subvert this potential issue, large-cap companies adding an ESG component can help investors add a layer of safety. If regulatory measures rain down on the ESG industry, large-cap companies could be better equipped to handle the changes and thus, limit volatility.
Diversified, Low-Cost ESG Exposure
Given the benefits of large-cap ESG exposure, there are various options for investors to get this exposure. For example, they can look at individual stocks, particularly big tech companies that focus on ESG, such as Google, Amazon, Apple, and Microsoft.
Or, they can simply opt to add the Calvert US Large-Cap Core Responsible Index ETF (CVLC). About 20% of the fund (as of April 6) contains those four names, giving investors diversified exposure to big name players that offer an ESG investment component.
While tech comprises a portion of the fund, the rest is spread among various sectors, adding to the fund’s diversification. Other sectors included in the fund are healthcare, financials, industrials, and consumer discretionary.
Per its fund description, CVLC seeks to track the performance of the Calvert US Large-Cap Core Responsible Index. Overall, the fund allows investors to gain diversified exposure to large U.S. companies that Calvert believes are demonstrating effective management of key ESG risks as well as opportunities.
The fund uses a discerning screener for its holdings, namely Calvert’s deep ESG research that applies the Calvert Principles for Responsible Investment, along with a proprietary view of financial materiality. Moreover, investors get access to CVLC with a low expense ratio of just 0.15%, which offers the necessary cost-effectiveness, especially in today’s economic backdrop of high inflation.
For more news, information, and analysis, visit the Responsible Investing Channel.