In the midst of the global health crisis, investors favor investments that make sense, as evidenced by the performance of green stocks and ESG fundraising.
One would have thought that in the panic caused by the health crisis, good resolutions in favor of responsible investment would take a back seat. The opposite effect has occurred, with investors turning overwhelmingly to green stocks (Schneider Electric, Neoen, Voltalia, etc.) and to socially responsible investment funds (SRI). While, with the exception of money market funds, all asset classes underwent redemptions in 2020, this was not the case for funds that meet environmental, social and governance (ESG) criteria. According to Quantalys, between January and November 2020, ESG-stamped equity funds raised 88 billion euros.
Strong outperformance in 2020
ESG equity fund outstandings now represent 394 billion euros, or 18.5% of the European market, those of ESG bond funds 152 billion, or 9.8%, and those of diversified funds 43 billion (6, 2%). For these three asset classes, ESG supports have an average market share of 13.5%, with 588 billion.
This ramp-up should continue due to the outperformance achieved. In 2020, it rose between 1% and 3.5% compared to non-ESG funds for European, euro zone , international, US and emerging equity funds . It was 2.2% for international bond funds and 0.4% for euro zone bonds. Over five years, annualized outperformances are however lower, ranging between 0% and 1% for all these categories. Indeed, a large part of last year’s outperformance can be explained by sector biases: these funds are less exposed to oil, commodities and banks, sectors that suffered in 2020. Conversely, they took advantage of the market’s enthusiasm for growth stocks.
Green recovery
“Responsible” investments should be supported in the future by the massive recovery plans of States facing the health crisis, which have placed ecological transition at the heart of their concerns. In France, 30 billion euros must be devoted to it in two years (transport, renovation of buildings, green technologies …). Management companies hope to ride this green wave, but in their project, their field of action is widening more and more from E of environment to S of social.
Muriel Breiman and Pascal Estève
Source: Investir.fr
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