How sustainability can drive financial outperformance
We now live in a world where sustainability has entered mainstream. That much is evident from the fact that over 72% of S&P500 companies are reporting on sustainability,
demonstrating a growing recognition of the strong interest expressed by investors.
This report, entitled From the Stockholder to the Stakeholder, aims to give the interested practitioner an overview of the current research on ESG.
In this enhanced meta-study we categorize more than 190 different sources. Within it, we find a remarkable correlation between diligent sustainability business practices and economic performance. The first part of the report explores this thesis from a strategic management perspective, with remarkable results: 88% of reviewed sources find that companies with robust sustainability practices demonstrate better operational performance, which ultimately translates into cashflows. The second part of the report builds on this, where 80% of the reviewed studies demonstrate that prudent sustainability practices have a positive influence on investment performance.
This report ultimately demonstrates that responsibility and profitability are not incompatible, but in fact wholly complementary. When investors and asset owners replace the question “how much return?” with “how much sustainable return?”, then they have evolved from a stockholder to a stakeholder.
CEO, Arabesque Asset Management