Markets
ESG Investing: Finding Your Motivation
ESG Investing: Finding Your Motivation
Environmental, social, and governance (ESG) factors are a set of criteria that can be used to rate companies alongside traditional financial metrics.
Awareness around this practice has risen substantially in recent years, but how can investors determine if it’s a good fit for their portfolio?
To answer this question, MSCI has identified three common motivations for using ESG in one’s portfolio, which have been outlined in the graphic above.
The Three Motivators
According to this research, the three primary motivations for ESG investing are defined as ESG integration, incorporating personal values, and making a positive impact.
These goals are not mutually exclusive, though, and an investor may relate to more than just one.
#1: ESG Integration
This motivation refers to investors who believe that using ESG can improve their portfolio’s long-term results. One way this can be achieved is by investing in companies that have the strongest environmental, social, and governance practices within their industry.
These companies are referred to as “ESG leaders”, while companies at the opposite end of the scale are known as “ESG laggards”. From a social perspective, an ESG leader could be a firm that promotes diversity and inclusion, while an ESG laggard could be a company with a history of labor strikes.
To show how ESG integration may lead to better long-term results, we’ve compared the performance of the MSCI ACWI ESG Leaders Index with its standard counterpart, the MSCI ACWI Index, which represents the full opportunity set of large- and mid-cap stocks across developed and emerging markets.
The MSCI ACWI ESG Leaders Index targets companies that have the highest ESG rated performance in each sector of its standard counterpart. The result is an index with a smaller number of underlying companies (1,170 versus 2,982), and a relative outperformance of 7.9% over 156 months.
#2: Incorporating Personal Values
ESG investing is also a powerful tool for investors who wish to align their financial decisions with their personal values. This can be achieved through the use of negative screens, which identify and exclude companies that have exposure to specific ESG issues.
To see how this works, we’ve illustrated the differences between the MSCI World ESG Screened Index and its standard counterpart, the MSCI World Index.
The MSCI World ESG Screened Index excludes companies that are associated with controversial weapons, tobacco, fossil fuels, and those that are not in compliance with the UN Global Compact. The UN Global Compact is a corporate sustainability initiative that focuses on issues such as human rights and corruption.
#3: Making a Positive Impact
The third motivation for using ESG is the desire to make a positive impact through one’s investments. Also known as impact investing, this practice enables investors to merge financial gains with environmental or social progress.
Investors have a variety of tools to help them in this regard, such as the MSCI Women’s Leadership Index, which tracks companies that exhibit a commitment towards gender diversity. Green bonds, bonds that are issued to raise money for environmental projects, are another option for investors looking to drive positive change.
ESG Investing For All
With various angles to approach it from, ESG investing is likely to appeal to a majority of investors. In fact, a 2019 survey found that 84% of U.S. investors want the ability to tailor their investments to their values. Likewise, 86% of them believe that companies with strong ESG practices may be more profitable.
Results like these underscore the high demand that U.S. investors have for ESG investing—between 2018 and 2020, ESG-related assets grew 42% to reach $17 trillion, and now represent 33% of total U.S. assets under management.
Markets
Ranked: The World’s 50 Top Countries by GDP, by Sector Breakdown
This graphic shows GDP by country, broken down into three main sectors: services, industry, and agriculture.

Visualized: The Three Pillars of GDP, by Country
Over the last several decades, the service sector has fueled the economic activity of the world’s largest countries. Driving this trend has been changes in consumption, the easing of trade barriers, and rapid advancements in tech.
We can see this in the gross domestic product (GDP) breakdown of each country, which gets divided into three broad sectors: services, industry, and agriculture.
The above graphic from Pranav Gavali shows GDP by country, and how each sector contributes to an economy’s output, with data from the World Bank.
Drivers of GDP, by Country
As the most important and fastest growing component of GDP, services make up almost 60% of GDP in the world’s 50 largest countries. Following this is the industrial sector which includes the production of raw goods.
Below, we show how each sector contributes to GDP by country as of 2021:
Country | Services (% GDP) | Industry (% GDP) | Agriculture (% GDP) | Other (% GDP) | GDP (T) |
---|---|---|---|---|---|
🇺🇸 U.S. | 77.6 | 17.9 | 1.0 | 3.6 | $22.9 |
🇨🇳 China | 53.5 | 39.3 | 7.2 | 0.0 | $16.9 |
🇯🇵 Japan | 69.9 | 28.8 | 1.0 | 0.4 | $5.1 |
🇩🇪 Germany | 62.9 | 26.7 | 0.9 | 9.5 | $4.2 |
🇬🇧 UK | 71.6 | 17.3 | 0.7 | 10.4 | $3.1 |
🇫🇷 France | 70.3 | 16.7 | 1.6 | 11.4 | $2.9 |
🇮🇳 India | 47.9 | 26.1 | 17.3 | 8.7 | $2.9 |
🇮🇹 Italy | 65.0 | 22.7 | 1.9 | 10.4 | $2.1 |
🇨🇦 Canada* | 67.7 | 24.1 | 1.7 | 6.6 | $2.0 |
🇰🇷 South Korea | 57.0 | 32.4 | 1.8 | 8.8 | $1.8 |
🇧🇷 Brazil | 57.8 | 20.2 | 7.5 | 14.6 | $1.6 |
🇦🇺 Australia | 65.7 | 25.5 | 2.3 | 6.5 | $1.6 |
🇷🇺 Russia | 54.1 | 31.8 | 3.9 | 10.3 | $1.6 |
🇪🇸 Spain | 67.4 | 20.4 | 2.6 | 9.6 | $1.4 |
🇲🇽 Mexico | 59.2 | 30.8 | 3.9 | 6.1 | $1.3 |
🇮🇩 Indonesia | 42.8 | 39.8 | 13.3 | 4.1 | $1.2 |
🇮🇷 Iran | 47.3 | 38.0 | 12.4 | 2.3 | $1.1 |
🇳🇱 Netherlands | 69.4 | 17.9 | 1.5 | 11.2 | $1.0 |
🇨🇭 Switzerland | 71.9 | 24.6 | 0.6 | 2.8 | $0.8 |
🇹🇷 Turkiye | 52.8 | 31.1 | 5.5 | 10.6 | $0.8 |
🇹🇼 Taiwan | 60.6 | 38.0 | 1.5 | 0.0 | $0.8 |
🇸🇦 Saudi Arabia | 46.5 | 44.7 | 2.7 | 6.1 | $0.8 |
🇵🇱 Poland | 56.9 | 27.9 | 2.2 | 13.0 | $0.7 |
🇧🇪 Belgium | 68.8 | 19.6 | 0.7 | 10.9 | $0.6 |
🇸🇪 Sweden | 65.0 | 22.5 | 1.3 | 11.3 | $0.6 |
🇮🇱 Israel | 72.4 | 17.2 | 1.3 | 9.1 | $0.5 |
🇦🇷 Argentina | 52.5 | 23.6 | 7.1 | 16.8 | $0.5 |
🇦🇹 Austria | 62.4 | 25.8 | 1.2 | 10.5 | $0.5 |
🇳🇬 Nigeria | 43.8 | 31.4 | 23.4 | 1.4 | $0.5 |
🇹🇭 Thailand | 56.3 | 35.0 | 8.7 | 0.0 | $0.5 |
🇮🇪 Ireland | 55.4 | 37.8 | 1.0 | 5.8 | $0.5 |
🇭🇰 Hong Kong | 89.7 | 6.0 | 0.1 | 4.3 | $0.4 |
🇩🇰 Denmark | 66.7 | 19.3 | 0.9 | 13.1 | $0.4 |
🇸🇬 Singapore | 70.3 | 24.4 | 0.0 | 5.3 | $0.4 |
🇿🇦 South Africa | 63.0 | 24.5 | 2.5 | 10.0 | $0.4 |
🇵🇭 Philippines | 61.0 | 28.9 | 10.1 | 0.0 | $0.4 |
🇪🇬 Egypt | 52.5 | 31.2 | 11.4 | 4.9 | $0.4 |
🇧🇩 Bangladesh | 51.3 | 33.3 | 11.6 | 3.7 | $0.4 |
🇳🇴 Norway | 51.8 | 36.3 | 1.7 | 10.2 | $0.4 |
🇻🇳 Vietnam | 41.2 | 37.5 | 12.6 | 8.8 | $0.4 |
🇲🇾 Malaysia | 51.6 | 37.8 | 9.6 | 1.1 | $0.4 |
🇦🇪 U.A.E. | 51.6 | 47.5 | 0.9 | 0.0 | $0.4 |
🇵🇰 Pakistan | 52.1 | 18.8 | 22.7 | 6.4 | $0.3 |
🇵🇹 Portugal | 64.7 | 19.6 | 2.2 | 13.5 | $0.3 |
🇫🇮 Finland | 60.3 | 24.1 | 2.3 | 13.4 | $0.3 |
🇨🇴 Colombia | 58.0 | 24.9 | 7.6 | 9.5 | $0.3 |
🇷🇴 Romania | 59.1 | 26.7 | 4.5 | 9.6 | $0.3 |
🇨🇿 Czechia | 58.8 | 30.3 | 1.8 | 9.1 | $0.3 |
🇨🇱 Chile | 54.4 | 31.3 | 3.6 | 10.6 | $0.3 |
🇳🇿 New Zealand* | 65.6 | 20.4 | 5.7 | 8.4 | $0.2 |
Industrial sector includes construction. Agriculture sector includes forestry and fishing. *Data as of 2019.
In the U.S., services make up nearly 78% of GDP. Apart from Hong Kong, it comprises the highest share of GDP across the world’s largest economies. Roughly 80% of American jobs in the private sector are in services, spanning from healthcare and entertainment to finance and logistics.
Like America, a growing share of China’s GDP is from services, contributing to almost 54% of total economic output, up from 44% in 2010. This can be attributed to rising incomes and higher productivity in the sector as the economy has grown and matured, among other factors.
In a departure from the top 10 biggest countries globally, agriculture continues to drive a large portion of India’s GDP. India is the world’s second largest producer of wheat and rice, with agriculture accounting for 44% of the country’s employment.
While the services sector has grown in India, it makes up a greater share in other emerging economies such as Brazil (58%), Mexico (59%), and the Philippines (61%).
Growth Dynamics
Services-led growth has risen faster than manufacturing across many developing nations, underpinned by productivity growth.
This structural shift is seen across economies. In many countries in Africa, for instance, jobs have increasingly moved from agriculture to services and trade, where it now accounts for 42% of jobs.
These growth patterns are supported by rising incomes in developing economies, while innovation in tech is lowering barriers to enabling service growth. As the industrial sector makes up a lower share of trade and economic activity, the service sector is projected to make up 77% of global GDP by 2035.
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