As more investors begin assessing the impact of their investments on the environment and the community, more ways to measure that impact are being developed.

Last spring, Morningstar created the “Low Carbon Designation,” which puts the spotlight on mutual funds that hold assets with a low carbon footprint. Morningstar has now released a report on low carbon investing and the returns it gives. The report, “ESG Opens Doors,” lists many of the funds that concentrate on low carbon assets.

“Clients are realizing, backed by an increasing body of research, that a portfolio strong on ESG isn’t necessarily weak on returns,” said Jerry Kerns, editor for Morningstar magazine, where the report was published. As ESG becomes part of the investment vernacular, client interest is increasing, Morningstar said.

Tom Lauricella, the editor of Morningstar Direct who researched and wrote part of the report, added, “There were two clear lessons [from the research] when it comes to ESG adoption: Advisors can only know if clients are interested by asking, and many investors don’t know if they are interested until they are asked.”

Jon Hale, head of sustainability research for Morningstar and a member of the Morningstar magazine editorial board, said in a statement, “For those who want to achieve impact alongside financial return with their investments, the number of ESG impact strategies will continue to grow. More asset managers are broadly considering sustainability in their investment decisions, and investors now have a range of approaches available.”

The Morningstar “Low Carbon Designation” is one of the tools available to advisors to help them select among the growing number of ESG funds. The designation is given to funds that exhibit low overall carbon risk and have lower-than-average fossil fuel involvement. Morningstar also ranks all funds by their potential performance and singles out those funds that analysts feel will outperform their benchmark or category peers in the future.

In the United States, Morningstar found more than 100 low carbon funds that it thought would outperform, while in Europe 64 funds made the grade. Morningstar divides funds into 11 categories. Health care and information technology have the lowest carbon footprint, while energy, utilities and materials have the highest.

Low carbon funds are easy to find among large-cap growth funds, Morningstar said. More than half of the 100-plus low carbon funds are in this category because the funds are heavily invested in technology companies and do not have holdings in energy, utilities and materials.

It’s more difficult, on the other hand, to find low-carbon funds in the large-cap value category. On average, these funds have 20 percent of their assets in high-carbon-risk investments, Morningstar said.

Only two large value funds are designated low carbon: AMG Yacktman (YACKX) and Diamond Hill Large Cap (DHLRX).

Using the Portfolio Carbon Risk Score, which is a weaker screen that does not have a specific fossil fuel exposure component, other funds with low carbon footprints can be found, such as the Dodge & Cox Stock Fund (DODGX) and the DNCA Value Europe fund.

In the large blend category, 15 funds meet the Morningstar Low Carbon standard, including the Vanguard Dividend Growth Fund (VDIGX) and the PrimeCap Odyssey Stock Fund (POSKX), the Parnassus Fund (PARNX), the Parnassus Core Equity Fund (PRBLX) and the Vanguard FTSE Social Index Fund Investor (VFTSX).

U.S.-based funds in the foreign large blend category that received low carbon designations include the Artisan International Value Fund (ARTKX), the T. Rowe Price Overseas Stock Fund (TROSX) and the iShares Edge MSCI Min Vol EAFE ETF (EFAV).

The U.S.-based world large stock category includes several low-carbon funds, including the American Funds New Perspective Fund (ANWPX) and the Dodge & Cox Global Stock Fund (DODWX).

Two diversified emerging markets funds received the low-carbon designation: the Artisan Developing World Fund (APDYX) and the Virtus Vontobel Emerging Market Opportunities Fund (HIEMX).

Overseas, only three diversified emerging markets funds also received the low-carbon designation: Comgest Growth Emerging Markets, Vontobel Emerging Market Equity and Magellan.

The report can be found here.