Global ESG Equity Doubles

Global ESG (environmental, social, and governance) equity products nearly doubled in assets from 2019 to 2021 and most outperformed until 2022, says a research paper by Investment Metrics. The ‘Concentrated strong-performing ESG equity funds win the battle of flows’ report also found that 55 per cent of global ESG products are based in Europe, excluding the UK, and few have a value focus. Within the ESG peer group, 60 per cent broadly focused on sustainable products, 30 per cent focused on the environment, and 10 per cent focused on impact or social themes. The research found that 80 per cent of global ESG equity products outperformed over three years, with a three-year median return of 8.5 per cent, outperforming the benchmark by 2.3 percentage points and the broader global large cap equity peer group by 1.2 percentage points. However, they have had less success this year. For the first half of 2022, 78 per cent underperformed the benchmark, with the median underperforming by 2.5 percentage points.