In the Harvard Business Review, a skeptical article by Dambisa Moyo assumes that ESG factors are likely to be inconsistent with the creation of value for shareholders, but acknowledges that the numbers have been otherwise. In conclusion: “Global corporations must approach ESG in a way that is transparent, consistent, flexible, innovative, sustainable, sensitive to cultural differences, dynamic, and future-proofed. Furthermore, corporations should focus not only on mitigating the risks of ESG, but also on the opportunities it presents to continue to support human progress.”

Over the 18 months from November 2019-March 2021, the MSCI World ESG Leaders index outperformed the traditional MSCI World by +1.84%. At the same time the JP Morgan ESG EMBI Global Diversified index outperformed the equivalent non-ESG index by +1.94%. However, it’s important to note that big tech companies are core holdings to many ESG funds — and that the technology sector has dominated strong equity index returns in recent years. This raises the question of whether the ESG agenda itself yields returns, or if it’s simply that the highest yielding sector also has strong ESG scores. Even so, investors should not discount the value that an active ESG agenda grants companies in terms of the license to trade — the right to operate a business, which is granted by governments and regulators.

10 ESG Questions Companies Need to Answer