Stocks with higher ESG ratings have outperformed those with weaker ESG ratings every month this year, with the exception of April, according to a research conducted by Fidelity.

The research timeframe covers both the market crash in March and the recovery April-onwards, the report said. It included around 2,659 companies covered by the firm’s equity analysts, using its proprietary ESG rating system.

Research findings show that over the nine months, stocks with an ESG rating of “A” outperformed the MSCI AC World Index. In addition, it showed that there was a clear linear relationship demonstrated across the ESG ratings groups, with each one beating its lower rated group from A down to E.

The exception was in April, when companies with higher ESG ratings rose less when the market recovered compared with those with lower ratings. This suggests that those stocks with higher ESG ratings have a low beta high quality factor and are less prone to volatility in the broader market.

“This supports our view that companies with good characteristics have more prudent management and will demonstrate greater resilience in a crisis,” Jenn-Hui Tan, global head of stewardship and sustainable investing at Fidelity, said in the report.

“The market volatility of 2020 echoes that of 2008, despite the difference in circumstances. It would be natural to shorten investing horizon in a time of uncertain and put longer-term concerns about environmental sustainability, stakeholder welfare and corporate governance on the back burner.

“But our research suggests that the market does, in fact, discriminate between companies based on their attention to sustainability matters, both in crashes and recoveries, demonstrating why sustainability should be at the heart of active portfolio management,” she added.

The findings in fixed income are similar, the report noted. The bonds of the 154 A-rated companies returned around -0.5% on average, compared with -1.5% for the 557 B-rated companies and -4.6% for the 225 D-rated companies.

The research included around 1,450 companies covered by Fidelity’s fixed income analysts.