It pays for investors to put their money in companies that place high value on their environmental, social and governance (ESG) performance, says the world’s largest asset manager, BlackRock. Data collected by the company shows that annualised total returns from sustainable investing matched or exceeded traditional equity index funds over the past six years. ESG funds in emerging markets recorded a total annualised return of 5.7% from 2012 to 2018, compared to the 4.3% traditional equity index funds delivered over the same period. The price-to-earnings ratio was also higher for ESG stocks in the US and emerging markets. The ratio is the share price divided by earnings per share and indicates how much investors are willing to invest for each rand of a company’s earnings. A high price-to-earnings ratio means investors are anticipating higher growth from ESG stocks in future and are therefore willing to pay a bit more to acquire them. The asset manager said that for many years sustaina...

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