The blue line above reports that the best-in-class companies as measured by their ESG (environmental, social, governance) scores have outperformed their peers since this index was born in 2007. In six of the last eight years, the ESG index outperformed.
The MSCI ACWI ESG Index represents those companies that score in the top 50% of the parent index which is a global index spanning both developed and international markets. The companies that make the cut have superior environmental, social and governance (ESG) scores.
While there may be some added costs to pursuing industry leadership in environmental management, social supply chains and transparent governance, these efforts also appear to mitigate future economic risks.
To be fair, the domestic results report a slight underperformance for ESG. Since its inception in December 2000, the MSCI USA ESG index has returned 4.65% compared to the 5.11% return from the unfiltered MSCI USA index.
These result should help dispel the common belief that SRI/ESG investing is fiscally irresponsible. You can achieve a fair market return while also investing in a brighter future for all.