The ESG revolution shows how theme-driven investing can beat the indexes.
In 2019, the majority of renewable energy ETFs returned over 60%. ‘Meanwhile, the Tortoise Global Water ESG Fund beat the S&P 500 by nearly 10 percentage points. And YTD, the BVP Nasdaq Emerging Cloud Index—which aggregates SaaS companies, most of whom score high for ESG due to factors like low-carbon footprints and high employee compensation—has beaten the S&P 500 by more than 11%. Renewable energy, water, and SaaS are all themes we’ve highlighted in these pages for years. And they are all themes that will prove essential to maximizing ESG-driven outperformance over the next decade.
Today, ESG is a nebulous, if not disingenuous megatrend. It is beset with greenwashing—both companies and indexes exaggerating their environmental,...
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