Panel finds SRI guarantees good future returns
EUROPE - Adopting an environmental, social and governance (ESG) approach beyond a negative selection of companies in a portfolio should lead to better performance.
This is the view of a panel of pension experts who, speaking in Vienna at this year's IPE Awards Seminar, predict social and responsible investing (SRI) will have an impact on returns in the long run.
Kristoff Woutters of Dexia Asset Management in Belgium said: "Sustainability doesn't lead to underperformance and, in the long-term, SRI will clearly lead to better performance."
Christian Benigni, partner at First Avenue Partners in Germany, argued sustainability has to go beyond negative screening criteria: "There are new industries developing which provide phenomenal performance possibilities, and I think it would be wrong not to invest in those industries as they are developing and as they are going through their learning curve."
Benigni is adamant a new quality of returns is there to be had, though he warned that there are still risks. "Of course you have to do your due diligence," he said.
Jean-Francois Schock, senior managing director of strategic growth EMEA at State Street said: "The question of whether ESG influences the returns or not is almost irrelevant. It is an evolution of a mentality of both the users of pension assets and the ones who control them."
Moreover, a company's ability to live up to ESG issues could be seen as a proxy for the way in which the business is run, which could have a positive impact on the company's stock market returns, Schock added
"I think the UN charter on responsible investing is probably going to be more than just lip service and will make us develop our investment services in that light," he continued.
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