This year, ESG (Environmental, Social and Governance) strategies have outperformed traditional portfolios. This is partially attributed to the outperformance of technology and the underperformance of the commodities sector during the ongoing COVID-19 crisis.
Within different business sectors, companies have emerged as ESG leaders for having made strides to better understand the sustainability of their business models. These companies were likely better prepared to cope with the pandemic by incorporating ESG factors into corporate decision making; they encouraged management to take a longer-term view of their business model than just focusing on short-term profitability and its impact on share price and stocks awards.
