It paid for investors to be sustainable in 2021, even as energy companies were among the stock market’s best performers.

Companies that scored the strongest on environmental, social, and governance metrics saw some of the highest returns in 2021 with help from stocks such as Nvidia (NVDA), Microsoft (MSFT), and TSLA (TSLA).

The Morningstar U.S. Sustainability Leaders Index–representing the 50 U.S. companies with the best ESG scores as measured by Sustainalytics (a division of Morningstar)–returned 33.3% for the year, beating the broader U.S. market by more than 8%.

It wasn’t just companies ranked the very highest in ESG scoring that outperformed. Morningstar’s broadest basket of sustainable companies, measured by the 373-stock Morningstar U.S. Sustainability Index, returned 29.1% in 2021, 3 percentage points better than the overall U.S. stock market.

That ESG strategies outperformed in 2021 is notable given the best-performing stocks across the market last year by far were oil and gas focused energy companies–names that don’t make it past ESG screens. Instead, the companies that are the very strongest from an ESG perspective tend to be large- or mega-cap, high-growth, technology companies. In 2021, these areas of the market did especially well–well enough to power past the gains in energy stocks.

“This year, companies with better ESG risk assessments outperformed their peers with the weakest ESG assessments,” says Sara Mahaffy, ESG strategist at RBC Capital Markets.

Read more @Morningstar