A study by McKinsey found companies with strong ESG practices outperformed their peers by 7%, provided they also outperformed on the fundamentals.
Several studies have indicated that firms with strong ESG performances tend to benefit from lower capital costs, increased return on investments and reduced risk profiles (Alduais 2023; Fulton, Kahn & Sharples 2012; Garcia, Mendes-Da-Silva & Orsato 2017; Nsibande & Sebasian 2023). For instance, a Morgan Stanley Capital International (MSCI), in an investment research company study, revealed that companies with high ESG ratings outperformed their low-rated counterparts by an average of 4.6% annually, between 2007 and 2017 (Vu, Lehkonen & Junttila 2022).