A recent FEAL luncheon series focusing on Investment and Ethics was organised by BNP Paribas Securities Services.
Ethics are not just a feel good factor; they are also a valuable way of reducing risk and ensuring the sustainability of returns. Research shows that portfolios constructed considering environmental, social and governance (ESG) factors can outperform. (The MSCI World ESG Index, consisting of companies with high ESG performance in developed economies, gained 28.2% in 2013, compared to a gain of 27.4% by the MSCI World Index.) Yet, less than half of asset managers and owners consider ethics and ESG factors when constructing their portfolios.