Highlights of the new Morgan Stanley report on ESG investing:

In 2020:

U.S. sustainable equity funds outperformed their traditional peer funds by a median total return of 4.3%.

U.S. sustainable bond funds outperformed their traditional peer funds by a median total return of 0.9%.

U.S. sustainable equity funds’ median downside deviation was 3.1% less than traditional peer funds.

U.S. sustainable taxable bond funds’ median downside deviation was 0.4% less than traditional peer funds.

In a year of extremes brought on by the pandemic, 2020 encapsulated wild market movements. It started with a steep drop in markets last March, followed by a global recession and months of severe market volatility that ultimately ended with rising markets. Sustainable funds, which focus on environmental, social and governance (ESG) factors, across both stocks and bonds, weathered the year better than non-ESG portfolios, according to the Morgan Stanley Institute for Sustainable Investing. An analysis of more than 3,000 U.S. mutual funds and exchange-traded funds (ETFs) shows that sustainable equity funds outperformed their traditional peer funds by a median total return of 4.3% in 2020. During the same period, sustainable taxable bond funds beat their non-ESG counterparts by a median total return of 0.9%.

Sustainable Investing During Coronavirus | Morgan Stanley