UK – The head of the UK insurance association says that socially and ethically responsible investing can increase returns and reduce volatility.
Mary Francis, the director general of the Association of British Insurers told a conference that the organisation is set to publish research next month which “lays to rest the myth that ethical investing through screening reduces return by reducing the investment choices available”.
“On the contrary the weight of evidence suggests that, incorporating social ethical and environmental criteria can reduce volatility and increase returns.”
She cited research by consulting firm Innovest showing that companies with an above average SRI rating outperformed those with a below average rating by almost 20% in the three years to mid-2003.
She told a conference organised by Isis Asset Management that institutions with an interest in long-term investment need to make sure that such considerations were “factored in”.
“Pension fund trustees have an important role to play in this since you are the customer of the fund manager and you can determine the approach that is taken.”