Sustainable investing is not monolithic. Approaches vary in motivation, implementation, and application. ESG indexes focused on value stocks, dividend payers, and quality companies with low valuations outperformed the broad equity market in 2022, though they lagged their counterparts that do not incorporate ESG screens, partly due to less energy exposure.
Meanwhile, indexes focused on gender equality and renewable energy outperformed, helped by below-market exposure to technology. The gender indexes were boosted by above-market weights in energy and defensive sectors like healthcare and consumer staples. Renewables-focused companies in the utilities and industrials areas held up well in 2022.
In this report you will find a comparison of the short- and longer-term performance of 100+ equity and bond ESG indexes to their non-ESG counterparts. Risk/return analysis is conducted across a variety of sustainable investing approaches and geographies.
Author:
Dan Lefkovitz, Strategist, Morningstar Indexes