This document discusses a study on the performance of sustainable investment strategies. Some key findings of the study include:
- Sustainable equity mutual funds and separately managed accounts had equal or higher returns and equal or lower risk than traditional peers for the majority of periods examined over the last 7 years.
- Existing research shows a positive relationship between corporate sustainability practices and stock price/operational performance.
- A sustainability-focused index outperformed the S&P 500 by 45 basis points annually since its inception in 1990.
- Manager selection is important for both sustainable and traditional strategies, as returns and risk vary significantly across funds.
Presentation by Kees Koedijk. Professor of Financial Management and Dean of the Tilburg School of Economics and Management, held on June 8 at an ICPM conference in Toronto. Also visit the website www.investmentbeliefs.org
An introduction to ESG (Environmental, Social and Governance) Investing from Artifex Financial Group, a leader in ESG portfolio research and management.
Effect of Portfolio Diversification on Commercial Banks Financial Performance...inventionjournals
The study examined the effect of portfolio diversification on Commercial Banks financial performance. Mixed method of research design was used and data was collected using questionnaires and interview schedules. Target population was 43 licensed Commercial Banks in Kenya from which one hundred and thirty three (133) managers were randomly selected to form sample size. Validity of the research instruments was ensured through content, face and construct validity testing. Data was analyzed using descriptive statistics and inferential statistics which included correlation analysis and bivariate regression analysis. The study established a positive statistically significant relationship between portfolio diversification and financial performance. The portfolio diversification explained 68% of the changes in the financial performance of commercial banks in Kenya and that most banks diversify their investments which has enabled them to increase profits and performance in the past years.The study recommended that financial institutions should invest in a combination of assets which are negatively correlated because this maximizes revenue (returns) and minimizes losses (risks). Further study should be undertaken to establish the best combination of assets that can yield an efficient portfolio.
Presentation by Kees Koedijk. Professor of Financial Management and Dean of the Tilburg School of Economics and Management, held on June 8 at an ICPM conference in Toronto. Also visit the website www.investmentbeliefs.org
An introduction to ESG (Environmental, Social and Governance) Investing from Artifex Financial Group, a leader in ESG portfolio research and management.
Effect of Portfolio Diversification on Commercial Banks Financial Performance...inventionjournals
The study examined the effect of portfolio diversification on Commercial Banks financial performance. Mixed method of research design was used and data was collected using questionnaires and interview schedules. Target population was 43 licensed Commercial Banks in Kenya from which one hundred and thirty three (133) managers were randomly selected to form sample size. Validity of the research instruments was ensured through content, face and construct validity testing. Data was analyzed using descriptive statistics and inferential statistics which included correlation analysis and bivariate regression analysis. The study established a positive statistically significant relationship between portfolio diversification and financial performance. The portfolio diversification explained 68% of the changes in the financial performance of commercial banks in Kenya and that most banks diversify their investments which has enabled them to increase profits and performance in the past years.The study recommended that financial institutions should invest in a combination of assets which are negatively correlated because this maximizes revenue (returns) and minimizes losses (risks). Further study should be undertaken to establish the best combination of assets that can yield an efficient portfolio.
This study examines the underlying components that determine the dividend policy statement of corporations in Nigeria. The study purposively select ninety-four (94) corporations out of the universe of companies listed in the Nigerian Stock Exchange. Financial ratios were extracted and computed from published annual audited financial reports spanning 2007 to 2017. This was informed by the ex-post facto research design adopted to observe key indicators of these corporations in retrospect. The panel regression analysis was used to explain the numerical phenomenon collated. The Durbin-Wu-Hausman specification test found the fixed effect model to be more suitable. The empirical results indicate that financial leverage has a significant negative impact on dividend payout; liquidity has an insignificant positive impact on dividend payout policy; profitability has an insignificant positive impact on dividend payout decision; and company size has a significant positive impact on dividend payout dicision. The study concluses that liquidity, profitability and company size are the determinants of the dividend policy of corporations in Nigeria. More specifically, company size was found to be a major determinant to the dividend policy statement of corporations in Nigeria. The study suggests that, corporations should sustain their liquid positions, asset base and profit levels at all times to meet the universe of desires of their shareholders.
In the fourth part of our ‘As If People Matter’ series, Michael Townsend takes the investor’s perspective, as they too try and make sense of a changing world.
[Another blast-from-the-past, published four years ago, this piece highlighted the shift towards sustainable investment and ESG metrics that we now see taking real shape.]
Finance is the lifeblood and lifeline of any business entity either commercial or non-commercial. The
Survival, Stability and Sustainability of a firm is highly associated with its financial wellness. It can be observed through its ability to pay(re) short-term as well as long term liabilities, meeting the regular financial obligations, to increase the value of firm and ability to generate profit. Financial analysis, evaluation, and assessment help in determines the financial position and financial strength of a firm. Among the plenty of methods and tolls available for financial performance, ratio analysis is more useful and meaningful. These ratios make it possible to analyze the evolution of the financial situation of a firm (trend analysis), cross-sectional analysis and comparative analysis.
Etude PwC "Bridging the gap" sur les investisseurs institutionnels (mai 2015)PwC France
Selon la dernière étude du cabinet d’audit et de conseil PwC, intitulée « Bridging the gap », sept investisseurs institutionnels sur dix (70 %) – parmi les 60 qui ont été interrogés par PwC au plan mondial – affirment qu’ils refuseraient de participer à une levée de fonds de private equity ou à un co-investissement si ceux-ci présentaient un risque environnemental, social ou de gouvernance.
Méthodologie :
Pour réaliser cette étude, PwC a mené des entretiens individuels avec 60 commanditaires de 14 pays, totalisant quelque 500 milliards USD d’allocation aux gérants ou general partners (GP) de fonds de private equity. Les participants à l’enquête ont répondu sur la base du volontariat, d’où une surreprésentation probable des investisseurs relativement avancés dans leur approche de l’investissement responsable. Le panel était composé à 30 % de fonds de pension, à 20 % de gestionnaires d’actifs et à 7 % de fonds souverains ou publics. Parmi les répondants figuraient de grands fonds de pension du monde entier, comme le CalSTRS (caisse de retraite de l’enseignement public de Californie), l’USS (caisse de retraite de l’enseignement supérieur britannique), la caisse de retraite de BT, le West Midlands Pension Fund, le Wellcome Trust, un fonds de pension suédois et des fonds confessionnels aux États-Unis et en Finlande. Parmi les principaux gestionnaires d’actifs figuraient les sociétés Aberdeen, Hermes GPE, F&C et BlackRock. 7 investisseurs français ont aussi participé à cette étude comme par exemple BPI France, Ardian ou OFI Asset Management (devenu depuis SWEN Capital Partners).
Responsible investment is rapidly becoming a mainstream concern within the investment industry. The dramatic growth in the number of investors who have adopted the Principles for Responsible Investment (PRI) is only the latest indicator of the increased attention the sector is paying to the integration of environmental, social and governance (ESG) factors into investment management.
Guía Profesional de Publicidad en Redes Sociales 2015Good Rebels
Territorio creativo ha creado la Guía Profesional de Publicidad en Redes Sociales, que pretende reunir en un mismo documento los diferentes formatos, plataformas y estrategias que puedes utilizar para que tu campaña llegue a buen término. Está guía se presentó en Bogotá el 11 de marzo.
This study examines the underlying components that determine the dividend policy statement of corporations in Nigeria. The study purposively select ninety-four (94) corporations out of the universe of companies listed in the Nigerian Stock Exchange. Financial ratios were extracted and computed from published annual audited financial reports spanning 2007 to 2017. This was informed by the ex-post facto research design adopted to observe key indicators of these corporations in retrospect. The panel regression analysis was used to explain the numerical phenomenon collated. The Durbin-Wu-Hausman specification test found the fixed effect model to be more suitable. The empirical results indicate that financial leverage has a significant negative impact on dividend payout; liquidity has an insignificant positive impact on dividend payout policy; profitability has an insignificant positive impact on dividend payout decision; and company size has a significant positive impact on dividend payout dicision. The study concluses that liquidity, profitability and company size are the determinants of the dividend policy of corporations in Nigeria. More specifically, company size was found to be a major determinant to the dividend policy statement of corporations in Nigeria. The study suggests that, corporations should sustain their liquid positions, asset base and profit levels at all times to meet the universe of desires of their shareholders.
In the fourth part of our ‘As If People Matter’ series, Michael Townsend takes the investor’s perspective, as they too try and make sense of a changing world.
[Another blast-from-the-past, published four years ago, this piece highlighted the shift towards sustainable investment and ESG metrics that we now see taking real shape.]
Finance is the lifeblood and lifeline of any business entity either commercial or non-commercial. The
Survival, Stability and Sustainability of a firm is highly associated with its financial wellness. It can be observed through its ability to pay(re) short-term as well as long term liabilities, meeting the regular financial obligations, to increase the value of firm and ability to generate profit. Financial analysis, evaluation, and assessment help in determines the financial position and financial strength of a firm. Among the plenty of methods and tolls available for financial performance, ratio analysis is more useful and meaningful. These ratios make it possible to analyze the evolution of the financial situation of a firm (trend analysis), cross-sectional analysis and comparative analysis.
Etude PwC "Bridging the gap" sur les investisseurs institutionnels (mai 2015)PwC France
Selon la dernière étude du cabinet d’audit et de conseil PwC, intitulée « Bridging the gap », sept investisseurs institutionnels sur dix (70 %) – parmi les 60 qui ont été interrogés par PwC au plan mondial – affirment qu’ils refuseraient de participer à une levée de fonds de private equity ou à un co-investissement si ceux-ci présentaient un risque environnemental, social ou de gouvernance.
Méthodologie :
Pour réaliser cette étude, PwC a mené des entretiens individuels avec 60 commanditaires de 14 pays, totalisant quelque 500 milliards USD d’allocation aux gérants ou general partners (GP) de fonds de private equity. Les participants à l’enquête ont répondu sur la base du volontariat, d’où une surreprésentation probable des investisseurs relativement avancés dans leur approche de l’investissement responsable. Le panel était composé à 30 % de fonds de pension, à 20 % de gestionnaires d’actifs et à 7 % de fonds souverains ou publics. Parmi les répondants figuraient de grands fonds de pension du monde entier, comme le CalSTRS (caisse de retraite de l’enseignement public de Californie), l’USS (caisse de retraite de l’enseignement supérieur britannique), la caisse de retraite de BT, le West Midlands Pension Fund, le Wellcome Trust, un fonds de pension suédois et des fonds confessionnels aux États-Unis et en Finlande. Parmi les principaux gestionnaires d’actifs figuraient les sociétés Aberdeen, Hermes GPE, F&C et BlackRock. 7 investisseurs français ont aussi participé à cette étude comme par exemple BPI France, Ardian ou OFI Asset Management (devenu depuis SWEN Capital Partners).
Responsible investment is rapidly becoming a mainstream concern within the investment industry. The dramatic growth in the number of investors who have adopted the Principles for Responsible Investment (PRI) is only the latest indicator of the increased attention the sector is paying to the integration of environmental, social and governance (ESG) factors into investment management.
Guía Profesional de Publicidad en Redes Sociales 2015Good Rebels
Territorio creativo ha creado la Guía Profesional de Publicidad en Redes Sociales, que pretende reunir en un mismo documento los diferentes formatos, plataformas y estrategias que puedes utilizar para que tu campaña llegue a buen término. Está guía se presentó en Bogotá el 11 de marzo.
Re-Capturing the American Dream: How Brands Can Change the FutureSustainable Brands
What does the American Dream entail? If it's still here, how do people envision it? Has it changed over the years? Brands are a means to help people realize the American Dream and what it stands for. In this presentation with Eric Park of Ziba Design and Marc Mathieu of BeDo, they look at how sustainability can be rightfully married with the ideals of opportunity and freedom, IF we choose to frame the discussion as such. Beyond the age of material wealth and abundance. In order to design and market more sustainable lifestyles, values, ideals, Eric and Marc point out how American culture should be the beginning and end points.
Consumer Insights on Green and Sustainability in Social MediaSustainable Brands
Presentation by Umbria on people's attitudes and feelings on green and sustainability, along with a segmentation thereof.
Learn more about Sustainable Business & Design at: http://sustainablelifemedia.com
Presentation on Hewlett Packard's story of applying sustainability and environmental stewardship into its operations, brand communications, and internal research.
Learn more about Sustainable Business & Design at: http://sustainablelifemedia.com
A global revolution is in full swing, and the Sustainable Brands Conference is where sustainability, brand and innovation leaders gather to learn, share and strategize to shape the future. SB'12 was the largest gathering to date, a kinetic convergence of innovators from more than 150 companies from around the world finding new ways to create monumental disruption in traditional models of commerce and consumption.
Cultural Fusion and Creativity: Bringing Surprising Sustainability Solutions ...Sustainable Brands
Choice editing in business is a wondrous thing – as marginal of an issue as it may sometimes appear, it often has the potential to make or break a business idea, an industry or even a whole economy. Should everything that sells be sold and, if not, where do you draw the line? While we won't go into the full ethical depths of this question, in this session we explore stories from companies that have edited products out of their product portfolio with reasons relating to responsibility and/or sustainability, as well as the long term direction of the business. The wider discussion will explore when action needs to be corporate led or consumers led, and therefore the different approaches companies can take to innovating products and services to improve its impact in society, influencing consumer behaviour or edit choice out of the market.
The market for sustainable investments has grown to over $12 trillion in the U.S. and the movement of investable assets into sustainable strategies is expected to accelerate. The update reviews the growth of sustainable investing over the last decade and considers the valuation implications for your RIA.
Accelerating the Transition towards Sustainable InvestingAlok Nanda
Strategic Options for Investors, Corporations and other Key Stakeholders - A World Economic Forum White Paper
Institute: XIMB
Course: SBM
Faculty: Prof. Sutapa Pati
The Impact of Sustainable and Responsible InvestmentNia Rock
Sustainable, responsible and impact investors are a force for positive change. They have helped to improve the environmental, social and governance (ESG) practices of publicly and privately traded companies in the United States and around the world, indirectly benefiting countless individuals and communities. They have pursued investment strategies that foster economic development and expand financial services in lower-income communities.
WE BELIEVE that our Eighth Core Portfolio investment strategy provides the answers to the previously mentioned issues and offers a truly balanced approach to investing.
Equities, bonds, real estate and commodities are four asset classes that cover the core of any asset allocation process. The Eighth Core Portfolio is based on the idea that, during any given stage of a global investment cycle, money will flow across these assets, thereby affecting their performance. Rather than time the entry into the outperformer and the exit from the underperformer the Eighth Core Portfolio invests globally across all four in equal measure thereby ensuring that it participates in the best asset class in any environment. Over the investment period a constant exposure is maintained in order to avoid any outperforming asset class becoming a drag when the market turns.
This balanced approach is designed to produce medium to long term returns which exceed those of nominal cash returns. Historical evidence shows that this strategy has had proven outperformance in various timeframes and in all environments (see Tables 1 to 3) More importantly it minimizes volatility by taking advantage of the low correlations between the individual asset classes (see Table 4).
The Influential Investor. How UHNW and HNW investor behaviour is redefining p...Scorpio Partnership
The Influential Investor examines the forces that will shape the future of the wealth and investment management industry over the next ten years. The paper delves into the factors that influence UHNW investor behaviour and the ways investors are rethinking their goals for the future. Scorpio Partnership worked alongside the Economist Intelligence Unit and TNS as the recognised specialist on HNW insight
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Seminar: Gender Board Diversity through Ownership NetworksGRAPE
Seminar on gender diversity spillovers through ownership networks at FAME|GRAPE. Presenting novel research. Studies in economics and management using econometrics methods.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
Abhay Bhutada Leads Poonawalla Fincorp To Record Low NPA And Unprecedented Gr...Vighnesh Shashtri
Under the leadership of Abhay Bhutada, Poonawalla Fincorp has achieved record-low Non-Performing Assets (NPA) and witnessed unprecedented growth. Bhutada's strategic vision and effective management have significantly enhanced the company's financial health, showcasing a robust performance in the financial sector. This achievement underscores the company's resilience and ability to thrive in a competitive market, setting a new benchmark for operational excellence in the industry.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
1. INSTITUTE FOR SUSTAINABLE INVESTING MARCH 2015
Understanding the Performance of
Sustainable Investment Strategies
A growing number of investors are exploring
sustainable investing. In 2012, $1 out of every
$9 of US assets under professional management
was invested in some form of sustainable
investment, primarily in public equities. In
2014 that number increased to $1 out of every
$6 – to a total of $6.57 trillion now invested
sustainably.1
With this growth, investors increasingly ask
what tradeoffs, if any, there are to sustainable
investing. Some investors believe sustainable
investments underperform, or have higher risk
than their traditional counterparts.
We set out to explore whether this view is
accurate.
Key Findings
• Investing in sustainability has usually met, and often
exceeded, the performance of comparable traditional
investments. This is on both an absolute and a risk-adjusted
basis, across asset classes and over time, based on our
review of US-based Mutual Funds and Separately Managed
Accounts (SMAs).
• Sustainable equity Mutual Funds had equal or higher
median returns and equal or lower volatility than traditional
funds for 64% of the periods examined.
• There is a positive relationship between corporate
investment in sustainability and stock price and operational
performance, based on a review of existing studies.
• Long-term annual returns of one index comprising firms
scoring highly on environmental, social and governance
criteria exceeded the S&P 500 by 45 basis points since its
inception in 1990.2
• Manager selection is crucial for sustainable and traditional
investments alike.
2. INSTITUTE FOR SUSTAINABLE INVESTING MARCH 2015
Please refer to important information, disclosures and qualifications at the end of this material. 2
Executive Summary
This study set out to analyze potential performance and risk differences
between sustainable and traditional investments.
We reviewed a range of studies on sustainable investment performance
and examined performance data for 10,228 open-end mutual funds and
2,874 Separately Managed Accounts (SMAs) based in the United States
and denominated in US dollars. In the scope of our review, we
ultimately found that investing in sustainability has usually met, and
often exceeded, the performance of comparable traditional
investments. This is on both an absolute and a risk-adjusted basis,
across asset classes and over time.
More specifically, when investors are deciding whether to pursue a
sustainable investing strategy, they should consider the following:
• Sustainable Equity Mutual Funds had equal or higher median
returns and equal or lower median volatility for 64% of the periods
examined over the last 7 years, compared to their traditional
counterparts. (Figure 2).
• Sustainable SMAs had equal or higher median returns for 36% of
the periods examined and equal or lower median volatility for 72% of
the periods examined, over the last 7 years, compared to their
traditional counterparts. On a risk-adjusted basis, sustainable SMAs
performed closely inline with their traditional counterparts (Figure 5).
• Sustainable Mutual Funds and SMAs had a tighter return and
volatility dispersion than their traditional peers (Figures 3, 4, 6).
• Individual Firms that actively pursue improvements in
environmental, social and governance metrics also tend to have lower
costs of capital and higher operational and stock price performance.3
• A 2011 Harvard study found, that given a $1 investment in 1993 in a
value-weighted portfolio of high sustainability versus low
sustainability firms, the high sustainability portfolio would have
grown to $22.60 by 2010, while the low sustainability portfolio
would have only reached $15.40, a difference of over 46%.4
• Benchmark performance of the MSCI KLD 400 Social Index, which
includes firms meeting high Environmental, Social and Governance
(ESG) standards, has outperformed the S&P 500 on an annualized
basis by 45 basis points since its inception (10.14%, compared to
9.69% for the S&P 500; July 1990 - Dec. 2014). 5
Ultimately, investors should remember that manager selection is
crucial; there is a high dispersion of returns and volatility across the
spectrum of sustainable and traditional investment strategies alike.
Methodology
To develop a clearer picture of the relative performance of sustainable
investments to their traditional peers, our review focused on three broad
areas:
• Individual Firm Performance. We reviewed a body of studies and
meta studies that assessed the impact of sustainability on financial
and market performance of individual firms.
• Benchmark Performance. We examined how the MSCI 400 KLD
Social Index6
, an index of firms selected for their relative strength in
sustainability metrics, performed against broader industry
benchmarks.
• Investment Fund Performance. We used publicly-available data
from Morningstar to assess open-end mutual fund performance, and
data from Informa PSN to assess SMA performance. Performance
was comparatively assessed using total returns for mutual funds and
gross returns for SMAs, based on the availability of data. Risk was
assessed using volatility (standard deviation). Our review used 7
years of calendar and trailing data, across both equity and fixed
income. 10 year data could not be fairly assessed and was excluded
due to a low number of sustainable funds in existence at the time. To
reduce the potential for error, we compared sustainable and
traditional investment performance between peers within the same
Morningstar category or Informa asset class. We only included asset
classes where there were at least 4 sustainable funds or SMAs with
continuously available data over the last 7 years.
We wanted to review the performance of sustainable investments from
these three perspectives; to arrive at a synthesized view that would be
beneficial for asset owners and managers, institutional and retail
investors and corporate management.
Defining Sustainability
We define sustainability as a commitment to economic well-being for
both the present and the future, balancing society’s needs today with the
demands of tomorrow. Sustainability encompasses behaviors,
processes, tools and technologies that can be perpetuated and replicated
in ways that achieve economic, social or environmental benefits. We
see sustainable investing as the practice of mobilizing capital to
businesses that engage in these behaviors and practices.
This paper is published by the Morgan Stanley Institute for Sustainable Investing. The Morgan Stanley Institute for Sustainable Investing is dedicated to accelerating
mainstream adoption of sustainable investing by developing innovative and scalable finance solutions to address global challenges—seeking both competitive
financial returns and positive societal impact. The Institute is committed to industry-leading work that combines Morgan Stanley’s history of excellence in client
service with cutting-edge approaches to investment. For more information about the Morgan Stanley Institute for Sustainable Investing, visit
http://www.morganstanley.com/sustainableinvesting. Kash Patel was the principal author of this report.
3. INSTITUTE FOR SUSTAINABLE INVESTING MARCH 2015
Please refer to important information, disclosures and qualifications at the end of this material. 3
Sustainable Investments
and Individual Firms
The Intuition of Top and Bottom-Line Impacts of
Sustainability
Sustainability can have a positive effect on firms that pursue it, in both
stock price and operating performance. For example, firms that reduce
waste and utilize natural resources more efficiently may see increased
profitability through reduced costs and increased efficiency. Through a
shift in focus, one large technology firm saved $422 million and
reduced electricity use by 5.8 billion kWh over a 12-year period.7
Another possibility is that firms that score high on employee
engagement might have lower turnover, and higher employee
motivation, leading to higher human resource cost efficiency. This has
been shown through a number of studies as well. Across 14 countries,
companies on “The Best Companies to Work For” consistently achieved
outsized, positive returns relative to their industry peers.8
It is important to note that specific outcomes from sustainable
investments cited by large firms are often positive in nature, which
some may construe as suffering from a reporting bias. Sustainable
investments with suboptimal outcomes may not be reported as
frequently or transparently as those that are successful. Despite this risk,
the active investments by firms, in advance of regulatory or other
external pressures, is surely a sign of a broader shift in strategic
direction. A 2014 study by Ceres found that 60 percent of Fortune 100
companies voluntarily set clean energy and greenhouse gas reduction
targets, saving an aggregate of $1.1 billion annually from 30,000
projects.9
Research on Sustainability and Performance
Academic research that explores the relationship between investments
in sustainability and overall firm and market performance also points to
a positive relationship.10
This is often true even as far back as the 1990s,
when the first socially responsible equity indices were launched.
The literature does not suggest that all investments in sustainability
produce positive returns. The key, according to one McKinsey study, is
that leading firms pursue investments in sustainability that aim to also
have a material financial impact.11
A broad 2014 meta study by Oxford University reviewed 190 of the
highest quality academic studies conducted on the relationship between
sustainability and firm performance. Overall, the study made a strong
case for business investment in sustainability, drawing the following
key conclusions from the body of studies they reviewed12
:
• 90% showed that sound sustainability standards lowered the cost of
capital.
• 80% showed a positive relationship between stock performance and
good sustainability practices.
• 88% indicated that operational performance of firms was improved
by robust Environmental, Social and Governance practices.
While correlation does not equal causation, firms that pursue
sustainability strategies that result in improved corporate governance,
resource utilization or employee engagement often outperform their
peers.13
In addition, firms that are focused on sustainability are also
more likely to better manage environmental, financial and reputational
risks14
, which is more likely to lead to lower volatility of cash flows.15
A 2011 study conducted by George Serafeim and Robert Eccles at
Harvard Business School also found that financial markets value firms
that incorporate sustainability practices into their operations. They
compared stock performance of 180 large US firms, using a matched
sample that classified 90 as high sustainability and 90 as low
sustainability. High sustainability firms were those that actively
incorporated material environmental, social and governance criteria into
decision-making at the firm level, while low sustainability firms did
not.
The study found that high sustainability firms significantly
outperformed their counterparts. Given a $1 investment in 1993 in a
value-weighted portfolio of high sustainability versus low sustainability
firms, the high sustainability portfolio would have grown to $22.60 by
2010, while the low sustainability portfolio would have only reached
$15.40, a difference of over 46%.16
4. INSTITUTE FOR SUSTAINABLE INVESTING MARCH 2015
Please refer to important information, disclosures and qualifications at the end of this material. 4
Sustainable Investments
and Benchmarks
While existing research highlights how sustainability can positively
impact a firm’s profitability and stock performance, how do highly-
rated sustainable firms perform relative to industry benchmarks?
One robust measure of sustainable investment performance is the MSCI
KLD 400 Social Index. The broad-based index only includes firms that
meet very high Environmental, Social and Governance ratings relative
to their peers. It also excludes certain sectors, such as alcohol,
gambling, tobacco, weapons and adult entertainment.
Over the period of available performance data, the MSCI 400 Social
Index performed largely in line with MSCI USA, its traditional
counterpart.18
Interestingly, the sector exclusions used in the benchmark
did not have a negative impact on performance, which might be
expected due to lower diversification.
As seen in Figure 1, the index also outperformed the S&P 500 on an
annualized basis since its inception in 1990, with the MSCI KLD 400
achieving an annualized return of 10.14%19
, compared to 9.69% for the
S&P 500 – a difference of 45 basis points.
While this difference is small, it adds up to a cumulative excess return
of 102.36% between 1990 and 2014.
It may also indicate a positive relationship between firms that invest
heavily in sustainability and broader market performance.
Figure 1 – Index Performance – MSCI KLD 400 vs. S&P 500 (July 1990 – Dec. 2014) – USD17
Source: Zephyr Analytics
Past performance is not a guarantee of future results. Indices are unmanaged and not available for direct investment.
5. INSTITUTE FOR SUSTAINABLE INVESTING MARCH 2015
Please refer to important information, disclosures and qualifications at the end of this material. 5
Sustainable Mutual Fund
and SMA Performance
We compared the performance of sustainable open-end mutual funds
and sustainable Separately Managed Accounts (SMAs) to their
traditional counterparts. Our focus was on those employing an active
sustainable investment strategy. Ultimately, our aim was to determine if
there was a meaningful difference in performance for funds or SMAs
employing an active sustainable strategy versus those that did not.
Methodology – Assessing Performance
To limit outliers from skewing our results, we avoided using averages
as a baseline for returns or volatility. We instead focused on how well
represented sustainable funds, though small in total number, were in the
top two quartiles of returns and risk for their peer group. Based on
availability of data, total returns were used for mutual funds, and gross
returns were used for SMAs. Risk was compared using volatility
(standard deviation).
We concluded that sustainable funds met or exceeded their peer group
in performance if:
• Returns. 50% or more sustainable funds appeared in the top half of
returns for their peer group.
• Volatility. 50% or more sustainable funds appeared in the bottom
half of volatility (standard deviation) for their peer group.
Returns and volatility were compared on both a calendar year (2007 –
2014) and trailing basis (3, 5 and 7 year). 1 year trailing data was
excluded, since it was the same as the 2014 calendar year data. 10 year
data could not be fairly assessed and was excluded due to a low number
of sustainable funds in existence at the time.
Methodology – Selecting Sustainable Funds and
SMAs
Sustainable funds and SMAs were identified from metadata in
Morningstar and Informa PSN, and comparisons were done between
funds in the same asset class. To limit the impact of currency
differences and market structure, we limited our review to funds that
were domiciled in the United States and allowed only US dollar
investments.
• Mutual Funds. Our dataset from Morningstar included 10,228 open-
end mutual funds. Of these, 118 equity funds and 31 fixed income
funds were tagged in Morningstar as employing a “Socially
Conscious” active investment strategy. We compared these
sustainable funds to peers in the same asset class, based on
Morningstar category.
• SMAs. We had access to data for 2,874 SMAs (equity only) from
Informa PSA. Of these, we considered 102 as sustainable, based on
those having either an “Important” or “Very Important” account
mandate for socially responsible investments. We also compared
sustainable SMAs to peers in the same asset class, as defined by
Informa PSN.
To ensure that our conclusions were meaningful, given the relatively
small number of sustainable funds and SMAs, we limited our review to
asset classes that had at least 4 sustainable funds with continuously
available data over the last 7 years. This resulted in the exclusion of
many equity and fixed income asset classes across the available set of
mutual funds and SMAs.
6. INSTITUTE FOR SUSTAINABLE INVESTING MARCH 2015
Please refer to important information, disclosures and qualifications at the end of this material. 6
Equity Mutual Fund Performance
Overall, sustainable equity funds performed favorably compared to their
traditional counterparts. Based on Figure 2, sustainable funds met or
exceeded median returns of traditional funds for 64% (42/66) of the
periods examined. They also met or fell below median volatility of
traditional funds for 64% (42/66) of the periods examined.
Looking at equity fund comparisons in Figure 2, the data shows:
• Large Value was the only asset class where sustainable funds were
not consistently overrepresented in the top two quartiles of returns.
Across all other asset classes, 50% or more sustainable funds were
represented in the top two quartiles of returns for their peer group
for the majority of periods under consideration.
• Excluding Mid Cap Blend, volatility comparisons yielded a similar
trend; 50% or more sustainable funds were represented in the bottom
two quartiles of volatility for their peer group for the majority of
periods under consideration. Sustainable Mid Cap Blend funds only
had favorable volatility outcomes in 3 out of 11 periods.
Grouping all equity funds under review, Figure 3 highlights that
sustainable equity mutual funds had a tighter return and volatility
dispersion than traditional equity mutual funds. Sustainable funds also
skewed toward lower volatility, with the majority of sustainable funds
having lower volatility than the median of the traditional funds.
Figure 2 – Sustainable vs. Traditional Mutual Fund Performance20
Source: Morningstar
Past performance is not a guarantee of future results.
7. INSTITUTE FOR SUSTAINABLE INVESTING MARCH 2015
Please refer to important information, disclosures and qualifications at the end of this material. 7
Fixed Income Mutual Fund Performance
The number of sustainable fixed income funds was considerably
smaller, which resulted in the exclusion of most asset classes.
Of the two asset classes considered, sustainable fixed income fund
performance was relatively inline with traditional funds.
Looking at fixed income fund comparisons in Figure 2, the data shows:
• Short-term fixed income funds were very highly represented in the
top two quartiles of returns for their peer group across time. In terms of
volatility, however, they did not have favorable performance relative to
peers for any of the 11 periods under consideration.
• Intermediate-term fixed income funds exhibited the exact opposite
trend as short-term funds. Comparing peer returns, they performed
favorably in only 4 out of 11 periods. At the same time, they exhibited
consistently low volatility – with high representation compared to peers
for 10 out of 11 periods.
Figure 4 also highlights that there was generally greater dispersion
across traditional fixed income funds compared to sustainable
funds. In addition, a large number of traditional fixed income funds
took on higher volatility without providing commensurate returns. This
was less the case with sustainable fixed income funds.
Figure 3 – Sustainable vs. Traditional Risk vs. Return (7 Year Trailing)21
Equity Mutual Funds (Large Value/Blend/Growth, Mid Blend/Growth, Small Blend)
Source: Morningstar
Past performance is not a guarantee of future results.
8. INSTITUTE FOR SUSTAINABLE INVESTING MARCH 2015
Please refer to important information, disclosures and qualifications at the end of this material. 8
Figure 4 – Sustainable vs. Traditional Risk vs. Return (7 Year Trailing)22
Fixed Income Mutual Funds (Short-term, Intermediate-Term)
Source: Morningstar
Past performance is not a guarantee of future results.
Sustainable SMA Performance
Overall, sustainable SMAs performed favorably compared to their
traditional counterparts with respect to volatility, with equal or lower
volatility for 72% (24/33) of the periods examined. Sustainable
SMAs performed less favorably with respect to returns, meeting or
exceeding traditional median returns for 36% (12/33) of the periods
examined. On a risk-adjusted basis, sustainable SMAs performed
inline with their traditional counterparts (Figure 5).
Looking at SMA comparisons in Figure 5, the data shows:
• Large Cap. Compared to their peer group, sustainable SMAs only
had a higher than 50% representation in the top two quartiles for 4
out of 11 periods. In terms of volatility, sustainable SMAs were
represented in the bottom two quartiles of volatility for their peer
group for the majority of periods under consideration.
• Mid Cap. Sustainable SMAs were overrepresented in the top two
quartiles of returns compared to their peer group for 6 out of 11
periods. In terms of volatility, sustainable SMAs were highly
represented in the bottom two quartiles for 7 out of 11 periods.
• Small Cap. Sustainable SMAs were consistently underrepresented in
the top two quartiles of returns compared to their peer group, with
only 2 out of 11 periods of favorable performance. In terms of
volatility, however, sustainable SMAs were overrepresented for 9 out
of 11 periods, and closely inline for the remaining 2 periods.
Figure 6 highlights that traditional SMAs had a slightly higher return
dispersion, but a significantly higher volatility dispersion, suggesting
that sustainable SMAs exhibited favorable risk-adjusted performance
over time.
9. INSTITUTE FOR SUSTAINABLE INVESTING MARCH 2015
Please refer to important information, disclosures and qualifications at the end of this material. 9
Figure 5 – Sustainable vs. Traditional SMA Performance23
Source: Informa PSN
Past performance is not a guarantee of future results.
Figure 6 – Sustainable vs. Traditional Risk vs. Return (7 Year Trailing) 24
SMAs (Large, Mid, Small Cap)
Source: Informa PSN
Past performance is not a guarantee of future results.
10. INSTITUTE FOR SUSTAINABLE INVESTING FEBRUARY 2015
Please refer to important information, disclosures and qualifications at the end of this material. 10
What Is the Bottom Line for
Investors?
A number of drivers, including increasing natural resource scarcity,
regulatory pressures, shareholder expectations and board
accountability, among others, are likely contributing to some of the
positive firm- and investment-level effects we observed. More studies
are needed to conclusively determine what the underlying drivers are.
The academic research we reviewed on the performance of
sustainable firms and investments, both versus peers and benchmarks,
underscores how firms that consistently factor sustainability into their
business strategy can fare better; with positive effects both on a
firm’s profitability and stock price performance.
Reviewing 7 years of performance data for 10,228 open-end mutual
funds, we also observed that sustainable funds tend to exhibit slightly
higher returns and lower volatility than their traditional counterparts,
barring a few exceptions. A similar review of 2,874 SMAs invested
in public equities indicate that sustainable SMAs lag slightly in
returns, but have uniformly lower volatility. On a risk-adjusted basis,
sustainable SMAs perform inline with their traditional peers.
While it is important to understand these observed trends, we believe
investors should remember that manager selection is crucial; there is
a high dispersion of returns and volatility across the spectrum of
sustainable and traditional investment strategies alike.
Ultimately, our comparison indicates that investing to create a
positive impact does not necessarily require making a tradeoff in
investment performance; on the contrary, sustainable investments
often exhibit favorable return and risk characteristics compared to
their traditional peers. We expect that, over time, the fundamental
drivers of these performance differences will only grow in
importance to investors, both as a way to address important global
challenges and to improve investment performance.
To learn more about the Institute for Sustainable Investing, please visit www.ms.com/sustainableinvesting
To contact the Institute, email sustainability@morganstanley.com