Looking Toward a Better Place

Suzanne Cosgrove

Suzanne Cosgrove

Acting Managing Editor

The best word to describe environmental, social and governance (ESG) investing during the pandemic is resilience, said Societe Generale’s Isabelle Millat, head of the company’s sustainable solutions for global markets.

Why? ESG represents a “unique opportunity to come back better,” said Yannick Ouaknine, head of sustainability research at Societe Generale.

In a webinar held Thursday, Paris-based Millat and Ouaknine acknowledged ESG indices followed the broad equity market lower during the downturn that followed the COVID-19 and oil crisis, but said the sustainable family of investments as measured by Societe Generale’s in-house ESG Quant Index (SGIESGQE) performed better than certain other sectors and represented smaller drawdowns.

Once viewed as outliers, funds focused on socially responsible investing pulled in a record $12.2 billion in the first four months of 2020, according to a May 12 Wall Street Journal report, “ESG Investing Shines in Market Turmoil, With Help From Big Tech.”

Millat pointed to independent research by Morningstar that compared 26 ESG index funds’ returns between February 13 and March 13 against conventional peers and found returns were higher for 85 percent of the ESG EFTs of U.S. stocks. Millat added that investors looking at ESG products like ETFs should take care to cross-check across other sectors and compare ETF investment strategies.

Nonetheless, Ouaknine added that integrating ESG factors into an overall investment strategy appears to be “going mainstream.”  “Asset managers are now very vocal about responsibility,” Ouaknine said. “This is definitely a trend that will last.” 

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