ESG vs. SRI: Reduce harm versus create positive impact

When choosing to divest from a company due to ethical concerns, it may not necessarily impact the company materially as someone else will just buy the shares. This decision may lower your returns without actively improving the situation. The distinction between ESG and SRI investing lies in whether the fund only reduces harm or also replaces it with something better. An ESG portfolio that replaces harmful investments with positive ones, like investing in solar energy in place of Exxon Mobil, is considered positive and sustainable.