Are firms with better governance good for investors? Trends show this

Indices for companies scoring high on ESG standards have done well in five years but long-term trends are unclear.

The National Stock Exchange announced on Tuesday a new segment where companies will voluntarily take up higher governance standards. NSE Prime allows investors to better identify such companies that get access to quality investors in return.

Companies with higher governance standards appear to have done better in recent years. 'Business Standard' looked at indices focused on companies scoring higher on Environmental, Social and Governance (ESG) standards. Such indices have given around two per cent higher returns compared to their benchmarks on average over the last five years.

The analysis looked at the MSCI India ESG Leaders index and compared it