Top 5 ESG stocks outpace STI's blue chips

Sheng Siong Group leads the pack with 24% total return.

The five best-performing stocks in the iEdge SG ESG Leaders Index have averaged a 11.4% total return in 2020 YTD, outperforming the five strongest Straits Times Index (STI) stocks which averaged 1.3% returns over the same period, according to an SGX report.

These five firms with Environmental, Social, Governance (ESG) practices are Sheng Siong, Keppel DC REIT, Singapore Exchange, Mapletree Logistics Trust and StarHub. Sheng Siong Group led the pack with a 24% return in 2020 YTD, followed by SGX at 13% and Mapletree Logistics Trust at 5%.

This shows that the rising fame of ESG investments are paying off, as the iEdge SG ESG Leaders Index performed in-line with the STI in the 2020 YTD. Launched in 2016, the index measures the performance of SGX-listed companies with leading ESG practices. Currently, more than 70 iEdge SG ESG Leaders Index constituents are the best-in-class from a sustainability perspective, reported SGX.

“Recent years have seen Environmental, Social and Governance (ESG) factors replace Corporate Social Responsibility (CSR) as self-regulation metrics for listed companies. This has largely been demand-driven, with a surge in the number (and size) of market participants pursuing socially responsible investments and sustainable investing,” SGX said in the report.

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Conversely, the five least strongest constituents of the index in 2020 YTD averaged a 40.7% decline in total return over the period, compared to the five least strongest STI stocks that averaged a 33.6% decline in total return.

Eight of the nine stocks of the iEdge SG ESG Leaders Index that drew institutional inflows since 23 March and had high ESG weighting tilts at the last rebalance averaged a 40.5% total return from 23 March to 8 May, which brought their average decline in total return to 15.5%.

These nine stocks include Sunningdale Tech, iFAST, Soilbuild Bus Space REIT, SIAECO, Sheng Siong, Penguin, CRCT & Genting SG and JB Foods.

In addition, the 10 stocks that had the highest ESG rating at the most recent rebalance back in March were City Developments, Thai Beverage, Singapore Press Holdings, Sembcorp Industries and Sembcorp Marine, Singapore Tech Engineering, CapitaLand, Olam International, Genting Singapore and CapitaLand Commercial Trust.

Of these 10 stocks, Genting Singapore was recipient to the highest net institutional inflow from the 23 March close through to the 8 May close.