Media Coverage of
Investing for the Soul

• Wall Street Journal
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• The Financial Post
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• Environmental News Network
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Editorials

• Sustainability Profits Companies
• ESG Yields Profits
• Does Corporate Social Responsibility Increase Profits?
• Short Term Gain, Long Term Pain,
• India, Ancient Economic Behemoth, to Overtake China
• Frugality: A New Normal for Developed World Consumers
• Invest Ethically for ‘All Good’ Returns
• Investors Rush to Cash In on Climate Change
• Can US Bankers and Politicians be Truthful?
• Ethical Investors Successfully Engage Companies and Governments
• Religion: A Force in Ethical & Green Investing
• Unethical Investing By Charities
• Investing Ethically?
• The Rise of Islamic Finance
• US Government and Financial Elites Deceive Us
• The Ethics of Gold
• Unethical Statistics Lead Us Astray
• See all...

Shareholder Values

 
"70% increase since 2007 in the number of investors capitalizing on environmental trends [and] 54% of investors plan to invest in environmental technology over the next year."
-- Allianz Global
    Investors
    (USA) February 2010

"Canadian investors are generally favourable towards SRI. A third (32%) said they are 'very' or 'somewhat' interested. [Another] 55 per cent indicated that they would consider SRI if the return was 'as good or better' than other investments... The majority of investors surveyed view SRIs as 'futuristic' (78%) and 'a win-win for the individual and society' (77%)."
-- Ipsos Reid/
    Standard Life
    (Canada) October 2011

"European HNWI [High Net Worth Individuals] Sustainable Investment market... approximately €729 billion, representing an average of about 11% of European HNWIs’ portfolios as of December 31, 2009. This is a growth rate of 35% over the two-year period since the data was previously collected."
-- Eurosif
    (EU) September 2010

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.