Do investors care about sustainability?

March 2012
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Do investors care about sustainability?

At a glance

A review of investor research reveal a trend that more investors are using corporate sustainability reporting to inform investment strategies. Sustainable investing outpaces the growth rate of conventional investment assets under professional management.

Seven trends provide clues

A review of current investor research offers compelling evidence that more investors are using corporate sustainability reporting to inform investment strategies. Sustainable investing outpaces the growth rate of conventional investment assets under professional management, as studies show environmental, social and governance (ESG) factors can enhance investment value and/or mitigate risk.

Related reading

Test your sustainable investing I.Q.

In today’s economic environment, the growth rate for sustainable investing can be expected to decline.

True
False

False. Sustainable investing in the US is growing at a faster pace than conventional investment assets under professional management, according to a report by the Social Investment Forum Foundation. 12.2% of the $25.2 trillion in total assets under management tracked by Thomson Reuters is attributed to sustainable and responsible investing. That’s nearly one out of every eight dollars under professional management.

Sustainability leaders are more likely to have better stock performance.

True
False

True. According to Harvard Business School,* sustainability leaders tend to have better stock performance, lower volatility, greater return on assets, and greater return on equity. More and more organizations are tracking this trend.

*As published in the Harvard Business School paper, The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance, November 2011.

Less than half of the S&P 500 respond to Carbon Disclosure Project's (CDP) annual survey on climate-related business risks.

True
False

False. The majority -- 68% -- of S&P 500 companies responded to CDP’s 2011 disclosure request. 2011 also marked the first time in CDP’s ten-year history that the majority of S&P 500 companies reported embedding climate change actions as part of their business strategy.