From fad to force, sustainable investing sweeps Wall Street

NEW YORK (AP) — Sustainable investing has gone way past fad to become one of the steadiest forces on Wall Street.

Over the two years through July, month in and month out investors sent at least $1.5 billion into funds that call themselves socially responsible or that use environmental, social and corporate-governance criteria to make their investments. That's a far cry from other U.S. stock funds, which have been rocked by titanic swings of interest. In two out of every three months during that period, more money flowed out of U.S. stock funds than came in, according to fund tracker EPFR.

It’s the latest step in the evolution of so-called ESG investing, which has kept gaining in popularity despite once being dismissed as a mere niche. Some investors are choosing these funds because they want steadier returns in the future, while others simply want their portfolios to align closer with their values.

Of course, any boom brings in opportunists. Regulators have warned of some potentially misleading statements, such as firms claiming to be ESG-driven but owning shares in companies with low ESG scores. It’s reminiscent of how products along supermarket aisles get accused of “greenwashing,” or pitching their wares as “green" even if they're not.

But the wide expectation is for ESG and socially responsible investing to maintain their strong momentum, if not keep accelerating. The world, after all, keeps providing more examples of how climate change is affecting companies’ profits and losses.

Wildfires are burning some parts of the country, while heavy rains are flooding others. All the while, the COVID-19 pandemic continues to drag on the economy, and a dispiriting report on global warming released earlier this month had the United Nations declaring a “code red for...