ESG Funds Outperform KOSPI and Non-ESG Funds in Returns

Analysis shows that ESG (Environmental, Social, and Governance) funds have achieved higher returns than KOSPI and non-ESG funds.

Sustinvest, an investment advisory firm, announced on May 7, 2026, that it has published the "2025 H2 ESG Fund Market Review" containing these findings. The ESG performance analysis was conducted on 55 domestic equity funds.

According to the analysis, in the second half of last year, the ESG performance score of domestic equity ESG funds was 77.51, which was higher than that of KOSPI (77.21 points) and the top 10 domestic equity active fund families by assets under management (76.27 points). In particular, ESG funds managed using a positive screening strategy that invests in companies meeting ESG standards recorded the highest ESG performance score of 78.04.

The results indicate that higher ESG performance scores are associated with superior fund returns. ESG performance maintained a positive correlation with excess returns across all periods—6 months, 1 year, and 3 years. In addition, ESG performance and governance scores showed a negative correlation with downside risk, confirming that funds with higher ESG performance tend to exhibit lower long-term downside volatility.

Meanwhile, as of the end of last year, the net assets of the domestic ESG fund market amounted to 960.3 billion won, representing a 2.3% increase compared to the first half of last year.

Youngjae Ryu, CEO of Sustinvest, stated, "The superior risk-adjusted performance of ESG funds will serve as a compelling argument for the validity of ESG investing among long-term investors such as pension funds. We will continue to accumulate empirical evidence for ESG investing through rigorous analysis and take the lead in strengthening the trust foundation for ESG investment in the capital market."

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