Does Your Financial Advisor Really Understand Sustainable Investing? Here’s How to Find Out

A portfolio manager reviewing sustainable investments with clients

People are more motivated than ever to invest their money sustainably: a survey conducted last year¹ by the Morgan Stanley Institute for Sustainable Investing found that over three quarters (77%) of asset managers and owners reported increased interest in sustainable investing since May 2020, “driven by pressures from clients and investors, shifting public sentiment and regulatory developments.”

Despite that, there’s reluctance on the part of many investment professionals to meet the moment. According to a survey of 800 Registered Investment Advisors (RIA)s by SEI² — a global provider of investment solutions — 40% say they don’t know enough about sustainable investing to make suitable recommendations. Others worry about performance of sustainable funds, while yet others worry about greenwashing and impact washing — where the actual “sustainable” impact of an investment holding is dubious, at best.

Wind turbines in the ocean

In an environment in which investment firms either ignore the importance of sustainable investing or engage in only the most basic form of ESG integration (by including companies in their investment portfolios that engage in only bare minimum Environmental, Social and Governance practices), it’s important for investors to be vigilant.

Here are three things an investor can do when approaching a prospective wealth management firm to determine whether their portfolios engage in basic ESG integration, or provide a variety of more sustainable options to meet their financial needs.

Have a discussion about values alignment

Every sustainable investment decision reflects a balance between an investor’s need for financial returns and their desire to achieve certain social or environmental objectives. That’s why it’s so important to have an in-depth discussion with a prospective investment partner about your values alignment, says Sue-May Talbot, a Portfolio Manager and Partner at Genus Capital Management.

“I always start the conversation with what the client is looking for in terms of overall objectives and goals.  What is the client wanting to achieve with their investments,” says Talbot, who’s been with Genus for 34 years. “Most are looking for a blend of investments that align with their values while at the same time earn a decent rate of return so that they can also achieve their financial goals.”

A family meeting with their portfolio manger to review their sustainable investments

Everybody has financial objectives they need to meet, whether they’re saving for retirement, a big purchase, or planning for their estate. But Talbot notes that a lot of high-impact companies have not yet been around for decades, and are usually not dividend payers — a prime consideration for those closer to retirement.

“If you have high income requirements in your portfolio but also a desire to hold impact investments, which generally don’t pay dividends, then maybe a 100% impact equity portfolio is not a good fit,” says Talbot. “Or you might have to ask yourself: Are you willing to accept less  income generation in order to meet your values?”

Bottom line: a wealth manager who understands the intricacies involved with sustainable and impact investing can ensure your values and goals align with the investments in your portfolio.

Discover where you sit on the sustainability spectrum

There’s a spectrum of sustainable investing strategies — from the ‘entry level’ responsible investing approach to socially responsible investing (SRI) to the most advanced strategy, impact investing.

At the entry level, says Talbot, you’re looking at how various ESG issues (like climate change) are affecting companies in your portfolio, but it isn’t the driving force for your strategy: “This is less about values alignment, and more about managing risk and improving returns.”

When it comes to SRI, however, the investor has some expressed desire to “screen out” certain undesirable activities. “This is what we call negative screening, where you’re drawing a line in the sand and saying, ‘These are my values, I don’t want to invest in these things’ — say, anything that’s high-carbon intensive, or alcohol and tobacco — ‘and then whatever’s left over, I’m good to invest in.’”

Furthest along the spectrum is the concept of impact investing, where an investor is also applying what Talbot calls a “positive screen.” This is where an investor gets to pick and choose which themes they want to support: companies that are having a materially positive impact in sectors such as clean energy, climate action, good health and well-being.

“Once we’ve discovered where an investor sits on that spectrum, then we can help find a financial strategy that meets their investment needs,” she says.

Portfolio manager reviewing sustainable investments

Ask about the firm’s investment framework

If you’re truly interested in sustainable investing, you should also understand the framework that your investing partner uses.

Genus, with its ESG screens, considers the top 2,000 publicly traded companies, then applies a negative ESG screen to eliminate companies engaged in the extraction or distribution of fossil fuels, as well as activities such as weapons and military contracting, gambling, adult entertainment, nuclear energy, junk food, alcohol and tobacco.

To determine a holistic sense of a company’s impact, Genus then applies a proprietary Net Impact Scoreᵀᴹ, which evaluates both the beneficial and destructive nature of investments. Genus also evaluates all companies against the United Nations’ Sustainable Development Goals (SDGs), which focus on eradicating global poverty and hunger, boosting gender equality, and providing clean water and sanitation, among other things.

A group of doctors having a conversation

If a company gets 100% of its revenues from impact on those SDGs, it has a Net Impact Score of 100% positive impact³; if it gets 100% of its revenues from something like alcohol, it gets a 100% negative impact score. At Genus, companies considered for impact funds have to have a net-positive score, meaning more than 50% of their revenues come from impact on one or more of the UN’s SDGs.

All Genus investors, regardless of their holdings, get a Net Impact Score for their portfolio to evaluate the progress investments are making on ESG factors.

A sustainable investment should also produce good returns

Of course, investments still need to produce returns. So to achieve that, Genus ranks prospective investments on a matrix of criteria, including value (superior dividends, cash-flows and book value), growth (increasing cash-flows, earnings and dividends), expectation (analyst forecasts for earnings and cash-flow), momentum (rising share price characteristics), quality (better interest coverage and improving profit margins) and sustainability (superior ESG attributes). Companies that rank highly on the matrix get a “buy” rating, while those that do not get a “sell” rating.

Whatever the fund, investors shouldn’t be afraid to inquire what companies are in there — to ensure each aligns with their values and investment objectives. And ask to see a prospective investment partner’s track record of delivering both sustainable impact and financial results, says Talbot: “That speaks volumes about their credibility — if they’re able to do what they say they’re going to do over the long-term.”

Want to learn more about our approach to sustainable investing? Contact a Genus advisor today.


  1. 3 ESG opportunities for asset managers (no date) Morgan Stanley. Available at:,interest%20increasing%20across%20the%20world.&text=77%25%20of%20institutional%20investors%20reported,sustainable%20investing%20since%20May%202020. (Accessed: 16 August 2023).
  2. Sei unveils advisors’ Perspectives on Key Sustainability Issues (no date) SEI. Available at: (Accessed: 28 August 2023).
  3. (2021) Do you know your investment portfolio’s net impact? we do. and here’s why you should, too, Genus. Available at: (Accessed: 16 August 2023).

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