Today, we dispel the decades-old myth that performance must be sacrificed when investing responsibly in Sustainable/ESG assets. This myth rises again and again like Freddy Krueger in a horror movie, and, like Freddy, the myth should be laid to rest.
Evidence is mounting, with global money flows into Sustainable/ESG assets soaring, that highly-rated ESG (Environmental-Social-Governance) equities and funds are, at a minimum, producing similar returns vs. traditional assets.
Below, we share four graph comparisons of broad indexes vs. the same indexes filtered for ESG leaders (click charts to enlarge). Note the 5-year returns:
MSCI EM ESG-Leaders – GREEN
MSCI EM (Emerging Markets) – ROSE
MSCI USA ESG-Leaders – ORANGE | MSCI USA – RED
MSCI S&P 500 ESG – BLUE | MSCI S&P 500 – GREEN
If you appreciate the prospect of investing in companies that are well managed, equitable, and good corporate citizens, don’t be surprised if shifting to Sustainable/ESG investing brings positivity to your financial life. As Katherine Collins, Head of Sustainable Investing at Putnam Investments says: “You see consumers, employees, and investors increasingly reconnecting elements of environmental, social, and governance factors into their decision-making. Whether it’s a decision on where to work, a decision on what to buy, a decision on where to invest.”
For those who care about the world and people around us, the time is now to make a positive change and align your investments with your values, beliefs, and causes. These graphs begin to tell the performance story. Stay tuned.
Comparisons are not provided as a recommendation to invest in specific funds, but as broad conceptual evidence that positive ESG-focused investing does not lag in performance vs. traditional.