After 17 years working professionally in sustainable investment, I feel the weight of expectation to practice what I preach and invest only in SI funds. And indeed, most – but not all – of my personal investments are currently classified as sustainable. But I will choose a non-SI option if I believe the philosophy and process behind the offerings is the better match for my own values and my need to protect and grow my savings.

I am not alone in thinking this way. Many individual investors do not think about their investments in isolation, but in combination with all of their lifestyle choices. For example, they may choose to invest passively or in more traditional funds, but then engage in philanthropic activities or donations to counter it.

Similarly, our consumer choices and even career plans may be influenced by sustainability labelling. But as consumers – even when the labels are science-based and reliable – we make our own final decision while taking other factors into account. These include our own views, the costs involved, as well as the need to earn a living – even industries deemed unsustainable by SI taxonomies are still able to attract employees!

While my own investments will not move any needle in financial markets, my personal investing dilemma is the same one faced by much larger asset owners. This dilemma is increasing as the definition of ‘sustainable investment’ becomes more tightly defined by regulators.

Many asset owners will be faced with taking a decision over whether regulatory definitions and classifications still fit their own requirements for values alignment, impact and returns. This is especially the case when their SI decisions impact their financial returns goals, or where there is no universal consensus.

For example, should natural gas be considered a sustainable or a transition activity? And then what about nuclear power, or weapons used by police to make society safer? There have always been divisive topics in SI; different investors have different opinions, and they will make their decisions accordingly.

Some investors may choose to select investments that are not explicitly labeled as sustainable, but which meet their own criteria for investing in an environmentally and socially conscious way. A notable current example is SI approaches that focus on change, such as targeting transition, or through engagement-focused approaches. These have to date been under-recognized by SI regulation, but are considered by many investors to be the most impactful area of SI.

Other investors may be looking for even stricter definitions and then find that not all SI-labeled funds meet their needs. And all investors are interested in returns. If the criteria for sustainability labels become too restrictive, or prioritizes values or impact alignment over financial returns too heavily, we may be more likely see some asset owners deciding that this definition does not work for them.

So, who does get to decide what is sustainable? Regulators of course get to decide what is labeled as SI in the marketing of investment products. These minimum requirements, along with transparency guidelines, play an important role in protecting investors and enabling fully informed decisions.

Asset managers must comply with them, but asset owners do not have to agree! Asset owners will vote with their allocation decisions. And in the long run, only time and the progress we make toward the Sustainable Development Goals (SDGs) will tell whether our decisions were the right ones.