Sustainable investing generated returns similar to those of the overall market in 2022. The broad Morningstar US Sustainability Index fell 18.9% in 2022, outperforming the 19.5% decline of its parent, the Morningstar US Large-Mid Cap Index. Over the same time, the S&P 500 fell 19.4%.

As with markets generally, value stocks outperformed growth by a large margin among environmental, social, and governance investments. “These market dynamics were unfavorable for sustainable investments,” says Dan Lefkovitz, strategist for Morningstar Indexes. Consider that the Morningstar US Sustainability Large Cap Broad Growth Index lost 30.1% over the year, nearly 3 times the 10.1% decline of its Morningstar US Sustainability Large Cap Broad Value counterpart. Energy, a traditional value sector, was by far the best-performing equity sector, while the growth-leaning technology sector was one of the worst.

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