Companies that factor sustainability into their investments perform better on the stock market and offer investors less risk, according to “compelling” evidence found by DB Climate Change Advisors, Deutsche Bank’s climate change research arm.
The findings, from a report called Sustainable Investing: Establishing Long-Term Value and Performance, were drawn up after researchers examined over 100 academic studies into sustainable investment.
Every paper studied was in agreement that high ratings for corporate social responsibility (CSR) and environmental, social and corporate governance (ESG) would see a company’s capital costs be significantly lower. Meanwhile, 89% of the studies had evidence for “market-based outperformance” for these companies.
“The evidence is compelling”, wrote Mark Fulton, global head of climate change investment research at Deutsche Bank, in his editorial letter at the beginning of the report.
“Sustainable investing can be a clear win for investors and for companies.
“However, many SRI (socially responsible investment) fund managers, who have tended to use exclusionary screens, have historically struggled to capture this.
“We believe that ESG analysis should be built into the investment processes of every serious investor, and into the corporate strategy of every company that cares about shareholder value.”
Recently, stock market provider FTSE launched a specialised ESG service unit to cater to the large number of investors that were calling for a greater integration of ESG issues into investments.
Speaking to Blue & Green Tomorrow, Gordon Morrison, a managing director at FTSE, said that the unit can “shed light” on how investments – both institutional and private – can be directed sustainably.
Deutsche Bank was involved in another sustainable investment study recently, collaborating with the Calvert Foundation, the Rockefeller Foundation and three others, which laid down a market potential of $650 billion. It also revealed promising trends in the acceptance of sustainable investment by independent financial advisers.
Businesses and consumers must look at these studies with optimism and opportunity. Investing sustainably is the only way that a sustainable, low-carbon economy can be realised.
Blue & Green Tomorrow’s Guide to Sustainable Investment goes deeper into the subject, so have a read, be inspired, and make your money make a difference.
Survey reveals promising trends for sustainable investment
FTSE’s ESG unit can “shed light” on responsible investment
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