Ethical does not equate to lower returns: survey
Investors in ‘ethical’ share portfolios can dismiss the commonly held view that allocating assets to the sector is synonymous with inferior performance, according to preliminary results from a University of New South Wales (UNSW) study.
Early results to emerge from the research undertaken by UNSW’s Faculty of Commerce and Economics division suggest there may not be return penalties for investing in stocks selected for their adherence to reasonably accepted ethical standards.
UNSW professor John Evans says the data indicates previous historical analyses of the value added by sustainable securities is flawed through inappropriate analytics, narrow stock universes and the inability to remove risk management constraints which influence the securities included in an ethical portfolio.
“There has always been this intangible fear in the marketplace that sustainable or ethical investments produce lower returns,” Evans says.
The research focuses on a universe of 109 global securities selected for their sustainable characteristics and based on the filtering process adopted by the Ethibel organisation in Europe.
Evans says the results also suggest ethical benchmarks can now be included in corporate reporting, and that ethical stocks should no longer be seen at a disadvantage relative to other companies.
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