ESG drives outperformance as 'social' focus begins to see gains

MSCI and Hermes research

Companies with improving ESG credentials have on average outperformed by 14.4% in emerging markets and 5.2% in developed markets over five years, according to a new MSCI report.

The MSCI research into how valuations are impacted by ESG scores compares the financial performance of companies with strong positive ESG momentum versus companies with negative ESG momentum. What are the challenges faced when investing responsibly? MSCI's ESG momentum measurement examines progress via year-on-year changes of MSCI Industry-adjusted ESG scores, thereby measuring how changes in companies' ESG profiles impact performance. The research suggests MSCI ESG score upgrades led to higher valuations, while downgrades led to lower valuations. According to MSCI, the research...