ESG investment resists: the MSCI World and its sustainable version upload the same to 10 years

Since Monday, January 20, the date of inauguration of Donald Trump as president of the United States, the investment based on ESG criteria (Anglo -Saxon acronym for environmental, social and of corporate governance) Several shocks have been taken. The Republican leader announced, as soon as he was released in office, concrete measures against wind energy (this hurts the AND of ESG) and suppressed public diversity and inclusion programs (this would affect the S, the social part). Trump also warned that the country will pierce more to extract oil (“We’re Gonna Drill, Baby, Drill“said). With all this, it doesn’t strange that The sustainable world stock index, the MSCI World Selection (formerly called MSCI World Esg Leaders Index) has fallen 2.3% in three weekswhile the traditional reference, the MSCI World, is only left 0.6%.

But, beyond the volatility that has been experienced in this start of the year, the truth is that, if we look in the long term, Investors who have chosen to adopt sustainable bias in their portfolios have not resigned from profitability, as is sometimes believed. The MSCI World World Index has obtained an annualized 10 -year profitability of 8.2%, the same as the MSCI World Selection, its sustainable brother. If the objective of every investor should be to achieve an average profitability of 7% (which is the percentage that will allow it to double the capital every decade), with both indices they have achieved it well.

The MSCI World Selection index applies, as the vast majority of sustainable indexes, a filter Best in Classaccording to Claudia Antuña, a partner responsible for sustainability in AFI. That is to say, “Identify, for each of the sectors represented in the reference index [en este caso, el MSCI World] those emitters or companies with the best rating Esg. It stays with companies “that present best business practices regarding sustainability and, therefore, that best manage their extrafinancieros risks. Remember that these indices do not have to eliminate any sector from their investment universe,” adds this expert.

“As a consequence of this better management of ESG risks, it has been shown that Better companies rating ESG, on average, behave better in the face of high volatility events (Tow risks), “says Antuña. Thus, in times of generalized falls,” these emitters usually present a greater resilience against comparable from the same sector. “Therefore, under a profitability-risgo binomial perspective, Sustainable investment focused on better extra-financial risk management should allow us to optimize this relationship. It should also be improved, due to pure capitalization effect, “he says.

These conclusions refer to the generic indices of ESG, not those that specifically invest in clean energy companies. In this case, the photo is much worse for those investors who have chosen to index in such a concrete part of the ESG. The renewable sector has been hard on the stock market for several years For reasons such as high interest rates, problems in supply chains and, now, the Trump effect. The Global Clean Energy Transition Index has noted only 0.60% annualized to 10 years. Currently this index is quoted in non -minimum of COVID.

The names of all these indices have recently changed. Both MSCI and S&P have adjusted the denominations of these selective to the demands of the European market regulator, ESMA, which published in 2024 the minimum requirements that had to be met to be able to use denominations such as ESG or sustainable. MSCI has eliminated the acronym Esg from its indices, which are now called Selection, and S&P had to add a transition to the original name of the Global Clean Energy Index. The European regulator raises the demands for funds that want to be called “sustainable.”