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9 Oct 2023

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ESG Investing Makes Money, New Kroll Report Says

Financial advisor Kroll, which has 6,500 analysts in 34 countries and is headquartered in New York, has released a new, optimistic report about returns from ESG investing. The report encompasses 13,000 companies, studied over the eight-year period of 2013-2021, and finds that “companies with better ESG ratings generally outperformed those with lower ratings.

Among the report's findings:

* The positive relative performance of ESG Leaders vs. Laggards was generally consistent across all major geographic regions and for most industries.

* In the US, leaders averaged a 20.3% return compared to 13.9% by laggards.

* Worldwide, leaders earned an average annual return of 12.9%, compared to an average 8.6% for laggards.

* “European companies are further along in their ESG journey...for example,nearly a third of Western European companies were rated as ESG Leaders. In contrast, only 10% of North America and 6% of Asia companies had a Leader rating.”

The report also identifies what it terms “five flavors” of sustainable investing: ESG Investing, Socially Responsible Investing (SRI), Climate/Environmental Investing, Impact Investing, and what it calls the “catch-all” category of Sustainable Investing.

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