Climate-friendly stocks are moving markets away from short-termism, EU watchdog says

(EurActiv, 20 Feb 2020) Climate-friendly stocks have outperformed the broader market in the past two years and could also help to combat “short-termism” in financial markets, the European Union’s securities regulator said on Wednesday (19 February).

The European Securities and Markets Authority (ESMA) said integration of assets chosen for their environmental, social or governance (ESG) aspects is a growing part of portfolios.

ESMA said in its latest Trends, Risks and Vulnerabilities report that in stock markets, the ESG Leaders 50 index has for the past two years outperformed the corresponding benchmark index.

“This supports the view that investing in ESG does not compromise returns for sustainability, but instead enhances returns within a process of better incorporating ESG factors.”

Green bonds from the private sector are also growing, with €21 billion issued each quarter in 2019 with the amount now outstanding at €271 billion, still just 2% of the corporate bond market in the EU, ESMA said.

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EurActiv, 20 Feb 2020: Climate-friendly stocks are moving markets away from short-termism, EU watchdog says