A new Morgan Stanley report shows how profitable green investing was last year.
Good morning.
Green investing paid off in spades last year, according to a new report from Morgan Stanley being released this morning. CEO Daily got an early look. A few takeaways:
—The median return on sustainable equity funds was 19.04%—compared to 14.77% for non-sustainable. That’s a 4.3% difference in return.
—Sustainable bond funds also outperformed non-ESG counterparts, yielding 6.74% compared to 5.86%.
—Sustainable funds at the start of 2020 had grown 42% since 2018, and accounted for $17.1 trillion dollars under professional management in the U.S.—or about one of every three dollars. Inflows continued throughout the year.
Past performance, of course, is no guarantee of future results. The fact that Tesla soared while Exxon tanked could be one big reason for the variance—and could easily reverse as we emerge from the pandemic.
But at the very least, the study should provide further proof that doing what’s right for the environment and doing what’s right for your finances aren’t necessarily at odds. Morgan Stanley CEO James Gorman said the study shows sustainable investing has hit a tipping point:
“When we started our Global Sustainable Finance Group in 2009, we viewed sustainable investing as the future of finance. Today, we are seeing that it has reached the mainstream. As technology and data continue to advance and empower the field, more and more investors are making decisions with an ESG mindset.”
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
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IPO diversity
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Stakeholder economy
Attorney and consultant Robert Peres writes for Fortune that German-style stakeholder economy models, where employees and unions get board seats, have not worked out well in Germany. The Biden administration is considering such models, but, Peres writes: " Giving too much influence to employee representatives negatively impacts the viability of a corporation. In the case of management salaries and bonuses, the German unions have often sided with the board and let exaggerated pay-outs pass through." Fortune
This edition of CEO Daily was edited by David Meyer.
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