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IPE special report May 2018

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Pictet study makes contradictory SRI findings

EUROPE – A new study by Pictet Asset Management has come up with a contradictory view about socially responsible investing.

Pictet found that, on the one hand, it is possible to follow sustainable investment principles without sacrificing performance. On the other if found that capital markets “reward social accomplishments, but environmental awareness often drags on performance”.

Pictet analysed 288 listed European companies in a study called “Decomposing SRI Performance: Extracting Value Through Factor Analysis”. It looked at what factors hit performance over a four-and-a-half year period.

“Our results appear to support certain underlying beliefs of the sustainable investment community, but yet clearly contradict others,” said Christoph Butz of Pictet’s Sustainable Investment team.

“What we have clearly identified is that some sustainable factors add value, whilst others do not.”

“The findings confirm that it is actually possible, under certain conditions, to invest assets in accordance with sustainable investments principles without having to sacrifice performance,” adds Butz added.

Pictet said the correct weighting of SRI indicators according to their relevance is crucial. “Only a financially optimised, sustainable investment strategy was able to beat the benchmark over the entire observation period.”

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