What is ESG investing?

ESG stands for environmental, social, and governance. Terms like ESG, responsible investing, and sustainable investing are often mentioned interchangeably, and they all describe the increasing use of ESG criteria to make investment decisions. ESG measures the commitment that companies have in doing business in an environmentally conscious and socially responsible manner, while upholding a high level of corporate governance integrity. The goal of ESG investing is to align investments with ESG goals and generate attractive returns.

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What are the categories of ESG investing?

Investors are increasingly incorporating some or all ESG criteria into their investment decisions to reach both personal and financial goals. No matter your ESG goals, here are some factors for each ESG pillar that you can consider for your portfolio:

Environmental investing

The focus here is the impact a company's operations (manufacturing, supply chain, etc.) has on things like climate change and carbon emissions, air and water quality, land management, energy efficiency, and waste management.

Socially responsible investing

Investors who want to choose socially responsible investing look at how a company advocates for and addresses issues like workforce diversity, employee engagement, community relations, human rights, and labor standards.

Governance investing

This looks at how a company's board and management drive positive change for factors that can include the structure of the audit committee, diversity of leadership, executive compensation, relationship with shareholders, and lobbying or political activities.

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How ESG impacts a company's bottom line

In today's competitive environment, companies that take ESG considerations into account can better position themselves to make a positive impact on their bottom line by:

Increasing revenues

  • Identifying new markets or growing market share within existing ones
  • Maintaining strong labor relations that can increase employee motivation, productivity, and attract and retain new talent

Reducing costs

  • Reducing natural resource consumption in the production processes
  • Borrowing capital at lower costs as ESG-related risks are addressed and mitigated

Managing risks

  • Decreasing a company's exposure to regulatory and legal actions
  • Reducing the possibility of heightened social pressure from investors and activists

What are ESG funds?

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ESG mutual funds group shares of publicly-traded companies that adhere to environmental, social, and corporate governance principles. They can be a great way to add diversity to your portfolio and have investments that reflect your values.

We offer many ESG investing options, each strives to create positive, risk-adjusted, long-term outcomes. Our ESG portfolios integrate ESG principles into our time-tested, disciplined approach to investing. Starting with our capital market assumptions, we integrate ESG principles into our asset allocation models to create diversified investment portfolios that include mutual funds, ETFs, and individual securities to help advance your ESG goals.

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The Northwestern Mutual difference

Top 5 ranked investment service

We're one of the top U.S. Independent Investment Broker-Dealers.1

Ranking for Northwestern Mutual Investment Services LLC, Financial Advisor magazine and InvestmentNews, April 2021

5.0M+ clients at Northwestern Mutual

The number of people we're proud to call clients, and who put their trust in us.2

164+ years strong through depressions, downturns, and pandemics

The number of years we’ve been there for our clients—through depressions, downturns, and pandemics.

How ESG investing aligns with our values

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As a company, our commitment to socially responsible investing began in 2003. We allocated a percentage of our insurance general account (the pool of premiums received from policyowners used to pay claims and benefits) to an ESG style of investing. Today, we hold nearly $20 billion in these investments, more than 5 percent of our total general account portfolio, and will continue to expand that commitment.

Our ESG report
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