New Numbers Show Increased Profits from ESG, Climate Action, and Sustainability Communications - The Minute
The bottom line is getting a boost these days from increased profits driven by a number of sustainability factors. A recent study by New Amsterdam Partners finds that stocks with higher ESG ratings deliver superior returns and lower price volatility. New Amsterdam used the Thomson Reuters Corporate Responsibility Ratings, developed with S-Network, to conduct several tests. One example compared 100 randomly selected and equally weighted 40-stock portfolios with an identically created set, except that the lowest 10 percent of ESG companies were removed in the second set. The returns were higher for this second group of portfolios, the ones without the companies that performed poorly by ESG measures, in five of the six years surveyed.
CDP, formerly the Carbon Disclosure Project, has released a study that shows a connection between financial profitability and business leadership on climate action. Their report shows an 18 percent higher return on equity by companies addressing climate change over their peers, and a 67 percent higher return than companies that do not disclose on climate change. Dividends to shareholders were also higher, by 21 percent. And at last week’s Sustainable Brands New Metrics ’14 conference, Amy Fenton of Nielsen reported a five percent increase in sales for brands that communicate their sustainability messages. These numbers tell the story: sustainable business is profitable business.
I’m John Howell for 3BL Media.