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Shareholder Values

 
"Almost three-quarters of investors (74 percent) would be more likely to work with an advisor who could give them competitive investment returns from investments that also made a positive impact on society and 65 percent of investors would be more likely to stay with an advisor who could discuss responsible investing with them."
--
TIAA Global Asset
    Management
(USA)
    May 2016

"The vast majority of Canadian investors are interested in responsible investments (RI) that incorporate environmental, social and governance (ESG) issues, and they would be more likely to choose responsible investments if their financial advisor suggested suitable RI options for them."
--
Responsible
    Investment
    Association (RIA)
 
  (Canada)
    June 2017

"70% of people [in UK] want to invest ethically but the financial services industry is failing to respond." Referencing research by Abundance.
--
Acquisition
    International
   
(UK) June 2015

 

December 22, 2009

‘Best In Class’ Focus Provides Premium Returns

by Ron Robins*

A research study released this past summer suggests that for optimal returns ethical investors need to include ‘best in class’ stocks in companies that they might usually shun. As we know, ethical investors usually ignore companies because they are involved in activities, products, or services they deem unethical or harmful—even if they have ‘high’ ethical or ESG ratings.

Published in the July/August 2009 edition of the Financial Analysts Journal, the study authors Meir Statman and Denys Glushkov made the following comment about their research, “[That] analyzing 1992–2007 returns of stocks rated on social responsibility... found that this tilt gave such investors an advantage over conventional investors. The advantage from tilting toward stocks of companies with high social responsibility scores is largely offset by the disadvantage from the exclusion of stocks of shunned companies.

[And, therefore,] socially responsible investors can thus do both well and good by adopting the best-in-class method in constructing their portfolios: tilting toward stocks of companies with high scores on social responsibility characteristics but refraining from shunning stocks of any company.”
[Underlining added].

Now it is my belief that as a higher ethics and consciousness permeates society there will gradually be relatively fewer companies engaged in obviously destructive behaviours. Thus, there will eventually be a reduced need for negative screening and fewer companies to shun.

Yes, I know this sounds rather utopian to some readers. But especially in the spirit of a dawning new year, I remain an unflagging optimist about the direction of humanity. Hence, over the very long term I predict it will be possible for ethical investors to enjoy superior returns by only investing in the companies that sit well with their values.

* Ron Robins, MBA, is founder, Investing for the Soul, (http://investingforthesoul.com/), Huntsville, Canada. He advocates, writes and teaches on the subject of ethical investing. To contact him, e-mail to Ron Robins or call 705-635-3034.

© Ron Robins, 2009.

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Disclaimer: This website does not make investment recommendations. Nothing in this site should be interpreted as a recommendation or solicitation to buy/sell any securities or investments. Investing for the Soul is a source of general information and resources for ethical investing and socially responsible investing (SRI). Investors should consider their actions thoroughly and consult their financial advisers and other professionals, prior to taking any investment action. This website does not necessarily agree with the opinions expressed in articles on its pages or offered on the web pages to which it might be linked. Such opinions are the responsibility of the writers themselves. Furthermore, this site does not offer or provide any warranties, representations, guarantees, implied or otherwise, as to the accuracy, legality, copyright compliance, timeliness or usefulness of the information, materials or services on this, or other sites, to which it is linked. Also, Mr. Ron Robins is not an investment advisor, nor is he licensed with any professional investment related body, and thus is not able to, nor does he make, any investment recommendations.

 

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