Here, we briefly analyse the source of this underperformance, namely through the ESG index exclusion of a number of European coal/gas-utilities such as Fortum (+193bps/407%)1, Engie (+47/132%), EDF (+55/103%) and E.ON (+36/94%), and some more Russia exposed companies (Carlsberg +47/185%, Louis Dreyfus +164/170%). Underweights in the ESG index that has capped outperformance is more of a mixed bag but notable are BAE (defence, -2/-3%), Shell (+7/20%) and BP (+20/40%), Glencore (+45, 38%) and a number of alcohol and luxury goods related names.
If we were to derive any correlation between this performance and what ESG factors have driven the outperformance, it would be that direct emitters of CO2 and hence price-takers in terms of increased fossil fuel prices have suffered creditwise, which makes sense not least out of a general inflation context.
