In this article:

The first nine months of 2020 were characterised by the Covid-19 crisis, which produced whipsawing markets, big changes in monetary and fiscal policy, and a uniquely austere economic outlook.

In this period, stocks assigned the top Fidelity International rating (A) for sustainability outperformed the MSCI AC World index. A linear relationship, with A-rated stocks and bonds outperforming the Bs, who fared better than Cs, and so on down to E was also observed across the nine-month time frame.

Stocks at the top of our ESG rating scale (A and B) also outperformed those with weaker ratings (D and E) in every month from January to September, apart from April. 

Overall, we’re pleased to observe the relationship between high ESG ratings and returns over the course of a market collapse and recovery, supporting the view that a company’s focus on sustainability is fundamentally indicative of its board and management quality and its resilience.

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Jenn-Hui Tan

Jenn-Hui Tan

Global Head of Sustainable Investing

Benjamin Moshinsky

Benjamin Moshinsky

Editor at Large