All Rights Reserved 2008.
Mercer study supports positive link between responsible investment and financial performance |
|
|
|
| News - Alternative Investments | |||||||||||||||||||||||||||
| Thursday, 19 November 2009 15:04 | |||||||||||||||||||||||||||
|
Review of academic studies reveals impact of environmental, social and corporate governance on portfolio returns Specific environmental, social and corporate governance (ESG) factors can have a positive impact on portfolio returns, according to a growing body of academic research. In its new report, Shedding Light on Responsible Investment: Approaches, Returns and Impacts, Mercer summarises and comments on sixteen academic studies— the majority of which (ten) show a positive relationship between ESG factors and companies’ financial performance, four of which show a neutral relationship and two which show a neutral to negative relationship (see Table 1). “The idea that responsible investment does not have to come at a cost to performance is becoming well established in the institutional investment industry. In fact, the ‘Shedding Light’ report further builds the already strong case that considering ESG factors can add real and measurable value to an investment portfolio,” said Tim Gardener, global chief investment officer for Mercer’s investment consulting business. The research reviewed in the report include influential, peer-reviewed studies which apply traditional finance theory to ESG factors and span a variety of research methods, regional samples and investment approaches (such as screening, integration, and shareholder engagement). The studies also encompass a variety of geographies, both in country of origin and in markets considered. ”Shedding Light” serves as a follow up to the 2007 Demystifying Responsible Investment Performance report, in which Mercer and the Asset Management Working Group of the United Nations Environment Program Finance Initiative (UNEP FI) studied the existing academic ESG performance research. Considering these two reports together, a total of thirty-six studies examining the link between ESG factors and financial performance have been reviewed. Of these, twenty show evidence of a positive relationship between ESG factors and financial performance; only three show evidence of a fully negative relationship.
Table 1 – Summary of academic research on link between ESG factors and financial performance
The academic studies’ results vary in part due to differing research methods and short sample periods. In the past, studies of this kind tended to focus on the link between ESG factors and listed equities. This exclusive focus on equities is beginning to change, and Mercer’s new report includes several studies examining the financial performance of other types of investments, such as microfinance funds and hedge funds.
|
Most Read
AXA Wealth International launches Legacy Planning Bond
AXA Wealth International, the offshore investment arm of AXA Wealth, has launched the new Legacy Planning Bond…
FSA grants banking licence to Kent Reliance
Today sees the transformation of Kent Reliance Building Society into OneSavings Bank Plc, a bank run on…
NFU Mutual appoints Paul Glover as Chief Investment Manager
Insurance, pensions and investments specialist NFU Mutual has appointed Paul Glover as Chief Investment Manager (CIM) with…
Fine wine investment market starts 2011 with strong performance
The fine wine market started 2011 with a strong monthly performance with positive returns in January while…
Latin America and Asia lead global commercial property growth
Sentiment towards global commercial real estate continues to improve with Latin America and Asia leading the way…
Venture capital investing in UK falls by half, Government figures…
Investment in venture capital fell 48% in 2009, down from £1.30 billion in 2008 to £666 million…
Money transfers and advance fees top UK’s financial scam list
A large number of people in the UK who lost money to a scam in 2010 were…
Investors coming back to UK residential property market
The proven long term performance of UK residential property and a 6% rise in average rents in…
Cross border global real estate investment surged in 2010, report…
Global cross border investment increased by 60% year on year and accounted for 40% (US$130 billion) of…
Savings and investments to decline for high earners in 2011
The amount saved or invested each year by households in the UK with an income over £100,000…
UK banks set aside £50 million for green energy investment
Two leading UK banks are to increase the amount available for renewable energy investments as demand grows…
Egypt’s financial markets trying to get back to normal
Investors are right to be wary as a result of the current political turmoil in Egypt with…














RSS Feed