The advisor who wants to stress investing for good but doesn’t have a rigorous fund selection process can look “like an idiot,” says an ESG advocate.

ESG, or investing with a focus on environmental, social and corporate governance issues, is a sector populated by funds that call themselves ESG, but really are not, says Jeffrey L. Gitterman, the founder of Gitterman Wealth Management.

Yet ESG investing can be part of a movement toward a more independent financial advisory industry that shakes up corporate America, he says.

“There’s a lot of confusion about ESG in the advisor space—about what it actually is,” Gitterman says. “There’s a lot of ESG labels that are being slapped on funds that really are not (ESG) in our opinion.”

Sustainable, impact/ESG investing is not the same as socially conscious investing sayd Gitterman, who created Gitterman’s SMART (Sustainability Metrics Applied to Risk Tolerance) Investing Services.

“We describe it as the GPS of investing. Before GPS, you might take a road trip with a map and it had a lot of failed data about the trip you were about to take. You got surprised by road closures and traffic and all these other things. But today you use the GPS because it is going to give you live data about the trip you are going to take. In a way that is how we use our GPS.”

Gitterman describes sustainable, impact and ESG investing as “another data set” than socially conscious investing. Some socially conscious models are processing billions of pieces of information on companies, but they are not employing active management in making selections, he says.

“Without an active manager, someone who has a thesis on how he is going to utilize data in his stock or bond selection process, we are suspect that data is useful and whether it is material or not,” he says.

ESG means scoring and evaluating each company in a consistent manner. “You must use various, social, governmental and environmental metrics in the sectors that are appropriate for them,” he says.

Gitterman believes that the purpose of his company and the ESG movement is “to be very purposeful about wanting to use investor capital in order to change corporate behavior.” People at odds with certain corporate policies “can start driving corporate behavior if they use investor capital to do it,” he contends.

Still, he warns that some supposedly ESG funds do not meet the standard.

Where some would-be ESG managers go wrong, Gitterman adds, is only merely weeding out the worst companies in each sector and stopping there. Using this limited selection process can lead the advisor into the wrong investments, he says.

“Even when people claim to be doing that you could find ESG funds that owned Equifax, and Equifax was the worst-rated stocks for data breach risks in every stock that’s measured,” he says.

Some so-called ESG funds have held Wells Fargo and Volkswagen, companies that have poor scores as measured by ESG data. Some ESG rating systems picked up these companies’ problems and never invested in these controversial companies. But others had these controversial companies, he notes. Some advisors put clients wanting ESG into low-carbon funds, he warns, but some of them put Exxon and Halliburton in their portfolios.

“If an advisor is attracted by the low-carbon label and presented these funds to their clients wanting ESG, the advisor is going to look like an idiot,” says Gitterman.

How does one ensure they are investing in a true ESG fund?

Gitterman says advisors must do considerable research, including talking to fund management and understanding how a would-be ESG fund analyzes data and screens companies.

They must do manager and prospectus due diligence, he says, adding that the research should be done each quarter. The advisor who wants to focus on ESG investing must be relentless, Gitterman argues.

Focusing on finding the right ESG fund, he says, is not so much about tools. “It is really about the craftsmen. You can give him or her any tools if you have the right person to analyze stocks or bonds,” he says.

Getting through this considerable process, the financial professional can begin to start looking for companies that are “doing well by doing good,” he says.

Before that, Gitterman notes, it is critical that the advisor qualifies the client as someone  willing to live with this considerable portfolio review process. And that rigorous process, Gitterman cautions, requires an independent financial advisor.

“I think for a long time financial advisors were allowing Wall Street to dictate what products we sold to our clients,” Gitterman says.  “And I would assume that, as in a lot of other industries with the reversal of from top down to bottom up, we will see the client reversal because so many people now want ESG.”

ESG, Gitterman argues, is part of an independent advisor movement. “It’s time for us to start dictating what products and investments we put in front of the client and not listening to bankers and Wall Street.”