Our research reveals that, in a context of growing mistrust in ESG, the aggregation of extra-financial indicators and the reliance on a global ESG score may conceal opportunities at a more granular level. Indeed, we showcase that sub-pillars of E, S and G yield more differentiating returns compared to global ESG score, which holds across Eurozone, North America and Emerging Asia since 2021. In North America, the Waste and Biodiversity pillar rallied over the period. In Eurozone and Emerging Asia we point at a dependence from the Emissions and Energy performance on commodity prices: companies with controlled emissions profile outperform their browner peers when commodity prices are high. This emerging selectivity is also reflected in flows. While responsible investment funds experienced a net outflow in 2022 and 2023 for the first time since ESG inception in the early 2010s, the strategies with the highest levels of conviction were the most resilient in terms of flows.

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