Analysis of the World’s Largest Eco-Funds: How Sustainable are Eco-Funds and are Their Choice of Holdings Influenced by Effects Other than the Level of Environmental Sustainability?

The demand for the popular green investment vehicle known as the eco-fund is growing rapidly. However, the literature on the topic is limited, often focusing solely on financial performance. This thesis seeks to address gaps in the research by incorporating environmental performance measures into a quantitative analysis. Twenty of the largest eco-funds publicly traded in 2019 are disaggregated and the holdings are analyzed on financial and sustainability performance dimensions. A novel method is proposed for measuring fund performance through a sustainability weighted adjusted ranking, utilizing CSRHub’s 3rd party sustainability rating system. These rankings provide green investors with a useful tool during the investment decision making process. The results of this research indicate that investments in these funds may not support environmental sustainability to the degree investors expect and that fund manager motivation, fund jurisdiction, data availability and industry sector have an effect on the choice of investments.