Extra Returns in the Crisis

According to ESG specialist Jenn-Hui Tann of Fidelity International, ESG aspects are also ensuring that this is the case in the corona crisis, as sustainably managed companies have performed significantly better than the rest of the market.

This was the result of a performance comparison of more than 2,600 companies conducted by Fidelity analysts. It found that the bonds and equities of companies with a good ESG rating perform better in times of crisis, as they usually have better management teams and are therefore more stable and established in the market. Sustainability and returns are closely linked. The analysis is divided into A-ratings to E-ratings.

The result was that A-ratings with a good ESG balance sheet performed 3.8 percentage points better on average than shares of companies with an E-rating of around 7.4 percentage points in the 36 days between 19th February and 26th March 2020. The loss in value of bonds issued by companies with an A rating averaged 9.23 percent between January 1st and March 23, 2020. C-ratings lost 17.4 percent.

In general, companies with good ESG ratings are in a better position to position themselves better in times of upswings and downturns, as they are more stable. Nor should long-term performance be overlooked. Investors should act accordingly.

Source: click here.