ESG worked in 2019, but questions remain for long term

Companies that score better on environmental, social and governance metrics outperform or kept pace with those that scored lower. An analysis of the companies in the S&P 500 showed that companies above the median ESG score compiled by Sustainalytics returned on average 1.1 percentage points above those below the median. Furthermore, the top decile companies outperformed the bottom 90% by 5.2 percentage points.

A look at the longer term shows the gap between the two groups at each percentile to be less consistent. While the highest scoring companies did outperform the bottom 90% by 3.5 percentage points over the five-year annualized period, bottom quartile companies beat their more higher scoring peers by 1.4 percentage points.