ESG Research on Performance of Companies - Proof Points

Is ESG (Environmental-Social-Governance) investing good for the planet, or good for returns, or both?

A recent recent report claims it to be both.

Based on historical data from recent years, Subramanian’s research found that companies in the top fifth in terms of ESG ratings in 2005-2010 experienced the lowest (32%) volatility in earnings per share in the subsequent five year period. By contrast, companies with the worst environmental, social and governance records averaged 92% volatility.

I’ve never seen anything as effective as ESG characteristics when it comes to anticipating future earnings and volatility of U.S. corporations.
— Savita Subramanian Head of U.S. Equity and Quantitative Strategy BofA Merrill Lynch Global Research

The report drilled in further:

In their research report “ESG Part II: A Deeper Dive,” Subramanian and her colleagues suggest that progressive ESG practices make companies less likely to suffer large price declines, and signal significantly better three- to five-year returns on equity than their counterparts and a greater chance of long-term success. As one example, an investor who factored ESG into long-term investment decisions starting in 2008 would have avoided 90% of the U.S. corporate bankruptcies that have taken place within the universe of companies they analyzed since then, Subramanian says.

See real ESG metrics live here.  

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