Even in the midst of the coronavirus pandemic there are silver linings, among them a decline in air pollution due to a drop in driving, flying and industrial activity and better performance by mutual funds and ETFs focused on environmental, social and governance (ESG) factors.
According to S&P Global Market Intelligence, funds that invest in companies based on their ESG ratings have functioned as “relative safe havens in the economic downturn caused by the coronavirus pandemic.”
S&P Global Market Intelligence analyzed the performance of 17 exchange-traded and mutual ESG funds with more than $250 million in assets year-to-date through May 15, and 14, or 83%, outperformed.
Two of the 14 posted slight gains — Nuveen Winslow Large-Cap Growth ESG Fund (NVLIX) and Brown Advisory Sustainable Growth Fund (BAFWX) — and 12 declined less the the S&P 500, which fell 11.4% during the time period studied.
Why the Pandemic Is Increasing Demand for ESG
The coronavirus crisis is likely to focus investors’ attention on the social component of ESG analysis — how companies treat their employees and on the value of supply chains in countries with more transparent governments, according to S&P Global Chief Financial Officer Ewout Steenbergen.
“The acceleration of ESG will only continue and certainly, the current environment will help with that,” he said.