Subodh Mishra is Global Head of Communications at ISS STOXX. This post is based on an ISS ESG memorandum by Hernando Cortina.
Key Takeaways
- Reflecting their strong contribution to major indices, the so-called Magnificent 7 U.S. stocks have been a major focus of investor attention. This article considers the sustainability performance of the Magnificent 7 compared with the remaining equities in the STOXX USA 500.
- The article examines six ESG and climate metrics and considers aggregate performance as well as the dispersion in the data. The Magnificent 7’s financial strength is also reviewed using the Economic Value Added (EVA)-based ISS Financial Rating.
- The Magnificent 7 perform very well across overall ESG performance, carbon risk, emissions, and temperature scenario alignment as well as adequately on water risk. Nonetheless, they notably lag in alignment with the U.N. Sustainable Development Goals.
- While the aggregate results provide insight, for investors the most valuable aspect of this analysis might be to understand the dispersion within the Magnificent 7 and the specific risks and opportunities individual corporate performance present.