SRI/ESG Portfolios Outperforming in Pandemic

Gary Matthews

What happens when your portfolio is built around sustainability and compassion? Such portfolios focus on companies that build their businesses not simply around immediate, short- term profit, but rather with an integrated focus on customer satisfaction and experience, employee training and morale, good relationships in the community, and a more positive impact on the environment. This prioritizes well managed companies in innovative technology, patient-focused health care, transparent and efficient financial services, and renewable energy.

The result? SRI/ESG portfolios have always performed well under all market conditions, and particularly when the markets are weak – and especially during the current pandemic. Morningstar, Blackrock, Invesco, and Allianz are all reporting that funds focused on SRI and ESG are outperforming their non-SRI counterparts in 2020, as well as having outperformed during the lesser downturns from 2015 to 2018.

Of course, the SRI professional community has argued for decades this would ultimately be the case. In a world with an integrated global economy that has had a progressively more negative impact on the environment (pollution, climate change, virulent disease), it is simply common sense that companies that are positioned to help mitigate these factors will become progressively more valuable in the future, and portfolios that focus on these companies will perform better.

Now, in the midst of the pandemic, what has been common sense to seasoned SRI professionals and their clients is becoming obvious to all. SRI investors are investing for a more compassionate world, and they’re being rewarded for it.