Companies Excelling in ESG Management Show Positive Returns in This Year's Market Correction

ESG Disclosure: 151 Companies Achieve 4.2% Returns Since February
KOSPI Returns Significantly Outperformed
11 Top ESG Rated Companies Post 66% Returns Since Last Year's Rebound

[Asia Economy Reporter Ji Yeon-jin] Since last month, amid a correction phase in the domestic stock market, ESG (Environmental, Social, and Governance) investors have reportedly earned considerable profits.

On the 22nd, Hana Financial Investment analyzed the returns of 151 KOSPI-listed companies disclosing ESG information and found that the average return since last month was 4.2%, significantly outperforming the KOSPI return of -0.6% during the same period.

Among KOSPI-listed companies, those assigned ESG ratings increased from 141 in 2017 to 151 in 2019, but they still account for only 15% of the KOSPI. Notably, there was no change in the top ESG rating tier; since 2017, a total of 21 companies have belonged to the top 20%.

Among these companies, 11 firms whose ESG rating rankings gradually improved recorded a 66.2% return during the rebound market after COVID-19 in March last year, significantly outperforming the KOSPI return of 53%. Even during the correction phase following the sharp interest rate hike in February, they posted a favorable 3.8% return compared to KOSPI’s -0.6%. This is attributed to financial companies such as banks, insurance, and securities firms being well-disclosed in ESG information and many being included in the top rating tier.

Since last month, while the correction phase kept the KOSPI in a box range due to inflation concerns from rising U.S. interest rates, financial stocks soared as beneficiaries of inflation. For example, DGB Financial Group, ranked 2nd in ESG ratings in 2019, saw its stock price rise by 35.32% from February until the day before. KB Financial Group (9th) rose 22.09%, Shinhan Financial Group (1st) 13.20%, and Samsung Life Insurance (7th) 8.45%, all recording high growth rates.

ESG investments outperforming general investments is a global trend. Since 2020, the cumulative average return of ‘MSCI ESG Leaders’ in the U.S., Eurozone, and Korea has been analyzed to be around 40%.

In the U.S. as well, during this year’s correction phase, the one-month return of the top 30% ESG-rated companies, including JP Morgan, Johnson & Johnson, and IBM, was the highest at 4.3%. The mid-tier 30%, including Walt Disney, Walgreens, and Apple, posted a 4.1% return, while the bottom 30% (Coca-Cola, Walmart, McDonald’s, etc.) returned 3.4%. All of these significantly outperform the S&P index return of 0.9%.

Lee Jae-seon, a researcher at Hana Financial Investment, stated, "In the case of the Dow Jones Index, during the post-COVID-19 bull market, the performance of top and mid-tier ESG companies was favorable, whereas in the recent correction phase, the lower-tier ratings performed better."

This content was produced with the assistance of AI translation services.