Comparing ESG indexes against their benchmarks illustrates the alpha potential, and for emerging markets it is significant. The EM ESG leaders index, made up of 417 public companies that exclude any involvement in alcohol, gambling and arms trading and score highly on ESG rating, is currently outperforming MSCI EM by over 50 points. The benchmark typically does not include state owned enterprises due to low ratings over poor labor relations, polluting concerns and a lack of transparency and accountability, according to Alan Brett, a VP at MSCI.