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ESG investing in emerging markets

categories: Americas, Asia Pacific, Australia, EMEAI, MARSHALL Ric, NAGY Zoltan, SERETIS Panos, Asset Allocation and Asset Liability Management, Asset Pricing and Valuation, Factor and Risk Modeling, Investing (Investment Management), Performance Analysis, Portfolio Construction and Optimization, Responsible Investing, Risk Management, Asset Managers (Quant or Fundamental), Asset Owners, Banks, Hedge Funds, ESG Products & Services, Equities

Recent studies by MSCI ESG Research LLC have shown historical positive links between environmental, social and governance considerations and corporate financial performance. Because investors might still question whether ESG historically added value in emerging markets, where companies’ consideration of ESG risks is a more recent phenomenon, we compared the performance of four ESG indexes to their MSCI emerging-market parent. Overall, we found that despite emerging-market companies’ tending to have lower MSCI ESG Ratings than global peers on average, ESG characteristics measured by MSCI ESG Ratings had contributed to performance overall.

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