Amundi’s Quantitative Research team has been studying the evolution of ESG investing across asset classes and geographies for the past several years. With the coronavirus pandemic, we have carefully examined these Responsible Investing trends and have identified some interesting findings:
- Our research over the past two years has showed that ESG is becoming financially material, meaning that it is a source of outperformance, in equity and in bond markets. We have also shown that there is a growing transatlantic divide, between Europe and North America. Finally, while the E and G pillars had been outperforming from 2014, we have shown that the S pillar has caught up from 2016 onwards.
- The recent period and market turmoil confirms our recent research findings that show the financial materiality of integrating ESG criteria in investment decisions.
- The transatlantic divide that we had previously identified has continued during the crisis, but not in the way we expected it to. Indeed, the Social pillar, which had initially been lagging behind other pillars in terms of contribution to performance, has caught up spectacularly, but only in North America and not Europe.
- By studying these trends and the VIX, we have shown that the outperformance of the S in North America is tied to increased investor aversion to risk during this pandemic period.