Monday, July 26, 2010

Higher Returns from Ethical Investing?

By Ron Robins

Yes, it is possible that ethical investing can produce higher returns. For instance, America’s Social Investment Forum found in a “ …review of 160 [U.S.] socially responsible mutual funds from 22 members of the Social Investment Forum (SIF)… that the vast majority of the funds—55 per cent—outperformed their benchmarks in calendar year 2009, most by significant margins… ”

In fact, most studies of ethical and socially responsible (SR) investing do find roughly similar or even sometimes higher returns when compared to conventional investing. And this is what reviewers concluded after examining thirty key academic and broker studies related to ethical/SR investing for the United Nations Environmental Programme (UNEP) Finance Initiative and Mercer in late 2007.

Based on such evidence, and particularly the results found and lessons learned from some new studies, I believe that in the future and over the longer term ethical/SR investments will generally produce higher returns than conventional portfolios. Furthermore, ethical/SR investments have another benefit: they are more likely to enrich the quality of our lives and for society as a whole.

Read it all here.

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