Skeptics have voiced their opinion that some portfolio managers with stocks heavily weighted toward ESG metrics may have done well this year just because ESG stock selection kept them out of the energy sector. For one, that’s not a viable option for institutional fund managers running a sector-neutral strategy or long-only with minimum and maximum sector weight constraints. For them, mitigating risk within their sector exposure is the alternative. With that in mind, within the energy sector, we tested the performance of top quintile vs. bottom quintile (top/bottom 20%) constituent returns ranked on Refinitiv’s ESG overall score, compared to the

A clear trend has emerged within the energy sector, consistent negative earnings and revenue forecasts for the S&P 500’s oil & gas exploration & production (E&P) sub-industry. The group continues to face a weak pricing environment and is expected to stop the exponential production growth. Exhibit 1: S&P 500 E&P YoY Growth Rates vs. Net Profit Margin Analyst estimates for E&P’s 19Q3 aggregated earnings have fallen 20.1% since July 1 and revenue expectations have come down 9.0%. As a result, the outlook for 19Q3 YoY earnings are down 15.1 percentage points (ppts) to a decline of 39.5% and revenue fell