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MSCI | ESG investing in emerging markets

MSCI’s latest research, “ESG investing in emerging markets” was published Feb 11 on MSCI.com. To read more blogs from MSCI, visit our Research & insights page.     Talking points:Recent studies by MSCI ESG Research LLC have shown historical positive links between ESG 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.We found historical outperformance for the four broad-based integration ESG indexes and that a significant component of this outperformance can be explained by the index being overweight or underweight certain stocks based on ESG criteria.We also found that higher-rated emerging-market companies had higher profitability, lower idiosyncratic risk and a premium on their valuation over the study period of June 2013 until July 2019.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.Associated Marketing Collateral: MSCI Emerging Markets ESG Leaders Index 

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MSCI’s latest research, “ESG investing in emerging markets” was published Feb 11 on MSCI.com. To read more blogs from MSCI, visit our Research & insights page.     

Talking points:

  • Recent studies by MSCI ESG Research LLC have shown historical positive links between ESG 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.
  • We found historical outperformance for the four broad-based integration ESG indexes and that a significant component of this outperformance can be explained by the index being overweight or underweight certain stocks based on ESG criteria.
  • We also found that higher-rated emerging-market companies had higher profitability, lower idiosyncratic risk and a premium on their valuation over the study period of June 2013 until July 2019.
  • 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.

Associated Marketing Collateral: MSCI Emerging Markets ESG Leaders Index

 

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