Despite many investors believing that a socially responsible investment approach will deliver lower returns, University of Queensland Business School lecturer Darren Lee has found no evidence to support this claim.
His research compared firms with strong corporate social performance (CSP) scores against companies less concerned with such a strategy.
“I found that returns on a portfolio of leading sustainability firms are the same as that of a portfolio of lagging sustainability firms,” he said.
“Portfolio returns are the same whether investors favoured socially responsible firms or not.
“Perhaps the most unexpected finding is that leading CSP firms are bigger in relation to the firms that haven’t embraced strong corporate sustainability principles.
“Leading CSP firms seem able to attract equity capital more easily than other firms, thereby resulting in a lower cost of capital.”
To come to this conclusion, Lee analysed a best of sector corporate sustainability strategy from 1998 to 2002 using data from the Dow Jones Sustainability World Index.
