The institution IRRC (investor responsibility research center) did a study on ethical behaviour of a company, and more specified the relation between a green, environmental healthy company and the financial performance.
They looked at different criteria to measure whether a company has “high” environmental values as for example: the amount of chemical release, waste cleanup, releasing polluted water, …
Then they made two portfolios with companies from the S&P500 index. One with companies who had “high” standards for those criteria and another one with “low” standards.
On the other side to see whether a company had a good financial performance they measured return on assets, return on equity and total return to shareholders.
Once they had done those portfolios they compared all the data.
The conclusion is that there was no harm to be a “green” company, as matter of fact in many cases the “green” companies where even healthier and earned more than the companies who didn’t pay any attention to the environmental aspect.
There was one last remark. The IRRC said that it was possible that the causation is the other way and that financially strong companies are able to invest more in the environment then weak companies.
Thomas Deryckere
Source: http://www.eiris.org/files/research%20publications/doesethicalinvestmentpay99.pdf
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