Sustainable investing isn’t just a trend, it’s an evolving approach to putting your money into companies and projects that aim to make the world a better place. Despite headlines suggesting ESG (environmental, social, governance) investing is under pressure, the reality is very different. Investors are increasingly seeking opportunities where ethics meet performance, and evidence shows you don’t have to sacrifice returns for your values.
Take the TM Gravis Clean Energy Income fund, for example. It’s up 10.3% year to date*. This highlights an important point: sustainable investments can perform strongly, even in volatile markets.
Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and tax rules can change. Chelsea does not offer advice and so if you are unsure of anything please contact an expert adviser.
Why sustainable investing matters
Sustainable investing allows investors to consider the broader impact of their capital. That could mean supporting companies that tackle climate change, reduce pollution, promote diversity, or adopt better governance practices. Sustainable assets have reached record levels, with $3.56 trillion under management at the end of 2024** with nearly 90% of global individual investors expressing interest in sustainable investing, according to the Morgan Stanley Institute for Sustainable Investing***.
Performance without compromise
One of the myths about sustainable investing is that it comes at the expense of returns. In reality, many ESG and environmentally-themed funds have performed well in recent years. Themes such as clean energy, resource efficiency, and sustainable infrastructure have driven meaningful returns, reflecting both societal demand and business opportunity.
Investors who stayed the course with clean energy and environmental funds have seen portfolios rebound strongly, even after short-term market volatility. This demonstrates that aligning your portfolio with ethical principles doesn’t necessarily mean missing out on growth.
How to incorporate sustainability in your portfolio
Incorporating sustainable investments doesn’t require a complete portfolio overhaul. By spreading your investments across equities and bonds, you can achieve a diversified, ethical portfolio.
If you want to add income:
The Janus Henderson UK Responsible Income fund is a great example of how you can combine sustainability with income. This UK equity income fund actively avoids companies involved in industries that could harm the environment, such as fossil fuel extraction and certain chemical producers. Its goal is to provide a sustainable income stream while pursuing long-term capital growth. This makes it ideal for investors who want to see their money make a positive impact without sacrificing the potential for a reliable return. The fund’s focus on people, the environment and animal welfare ensures that investments are aligned with ethical principles. Over the past 10 years, this fund has returned 89.1% compared with 82.5% for the UK Equity Income sector^.
If you want to diversify with fixed income:
For those interested in bonds, the Rathbone Ethical Bond fund offers a sustainable approach to fixed income investing. This global bond fund evaluates each investment against strict ethical and environmental criteria. It excludes companies that negatively impact sustainable development and prioritises those with positive social and environmental outcomes. Managed with a “best ideas” approach, the fund aims to deliver income while supporting projects and companies that align with the UN Sustainable Development Goals. In an environment where traditional bond yields may feel unattractive, this fund allows investors to combine financial returns with ethical considerations. Over the past 10 years the fund has returned 41.4% compared with just 28.3% for the wider Sterling Corporate Bond sector^.
If you want global exposure:
The Pictet Global Environmental Opportunities fund takes sustainability a step further. It invests in global equities targeting nine environmental challenges, from climate change and biodiversity to freshwater use and ocean health. Unlike many funds that focus solely on climate or energy, Pictet looks at a broad range of environmental issues, including resource efficiency, sustainable agriculture and eco-friendly packaging. This thematic approach means investors can support solutions to some of the world’s most pressing environmental problems while seeking long-term growth. Over the past 10 years the fund has returned 206.5% compared with 181.1% for the wider Global sector^.
The future of sustainable investing
Sustainable investing is evolving rather than fading. This evolution doesn’t mean abandoning returns, rather it means finding companies and funds that meet both ethical and performance standards. With careful selection, sustainable investing can be a win-win: helping the planet while building long-term wealth.
Funds like Janus Henderson UK Responsible Income, Rathbone Ethical Bond and Pictet Global Environmental Opportunities show that it’s possible to invest ethically without sacrificing returns.
Sustainable investing is about aligning your money with your values, without compromising financial goals. Whether you’re passionate about clean energy, resource efficiency, or ethical business practices, there are ways to make a meaningful impact with your portfolio.
