How to invest ethically — ESG, SRI and green funds in practice

What is ethical investing?

Ethical investing involves placing capital in companies and funds that meet certain environmental, social and corporate governance criteria — while generating profit. It's not philanthropy. It's investing with a values filter.

Three main approaches:

• ESG (Environmental, Social, Governance) — evaluating companies for their impact on environment, society and governance quality
• SRI (Socially Responsible Investing) — excluding controversial industries (weapons, tobacco, fossil fuels)
• Impact investing — investing with specific, measurable social/environmental goal

Does ethical investing mean lower returns?

Short answer: no. Meta-analyses of over 2,000 studies (Friede et al., 2015; updated to 2024) indicate that:

• 63% of studies show positive correlation between ESG and financial results
• Only 8% show negative correlation
• The rest are neutral

In practice, MSCI World ESG Leaders index achieved comparable returns to regular MSCI World in 2015–2025, with slightly lower volatility.

How to start investing ethically in Poland?

1. ESG ETFs available through Polish brokers

• iShares MSCI World ESG Screened (SAWD) — global stock market with ESG filter
• Vanguard ESG Global All Cap (V3AM) — broad market with exclusions
• iShares Global Clean Energy (INRG) — clean energy (wind, solar, hydro)
• Xtrackers MSCI Europe ESG (XZEU) — Europe with ESG filter

Available through brokers like XTB, mBank (eMakler), BOSSA or Degiro.

2. Green bonds

Green bonds are debt instruments whose proceeds finance environmental projects. In Poland, the Ministry of Finance has issued green Treasury bonds denominated in EUR. Globally, green bond ETFs are available, e.g., iShares Global Green Bond.

3. TFI funds with ESG component

Polish TFI (investment funds) are starting to offer funds with ESG filter:

• NN Investment Partners — Responsible Investment Fund
• Allianz — ESG subfunds
• Amundi — ESG index funds

What to avoid — greenwashing

Greenwashing is when a fund advertises itself as "green" or "ESG" but in practice contains oil or mining companies. How to protect yourself:

• Check portfolio composition (top 10 holdings) — are there oil companies?
• Look for certification: EU SFDR Article 8 or Article 9
• Compare ESG ratings from independent sources (MSCI, Sustainalytics)

Exclusion criteria — what does SRI exclude?

Typical industries excluded from SRI funds:

• Weapons (conventional and controversial)
• Tobacco and alcohol
• Gambling
• Fossil fuels (coal, oil, gas)
• Animal testing (in some funds)
• Nuclear energy (controversial — some ESG funds accept it)

Building ethical portfolio

Sample portfolio for moderate ESG investor:

How Freenance can help

Freenance allows tracking investment portfolio value — including ESG ETFs and green bonds. You see what percentage of your wealth is invested ethically and monitor returns against conventional benchmarks. This way you combine values with results.

👉 Track your ESG portfolio with Freenance — freenance.io