Fund proves real value of ethical investing
02 Oct 2019 8:56 am by Mark Dunn
A fund which invests in major companies who have made a legal commitment to supporting the United Nations’ Sustainable Development Goals (SDGs) announced its 2018 performance on Thursday 24 January at the World Economic Forum in Davos. It returned 13.71 percent over two years, which is better than every major index other than the Dow Jones. This is hard evidence that ethical and sustainable businesses can be more profitable than others.
Last year, we wrote about the new fund which only invests in companies who can prove they are supporting the SDGs. The SCR500 fund studies the annual reports of the world’s 500 largest companies to determine which have made legal commitments to supporting the SDGs and other environmental, social and governance (ESG) criteria. It only invests in those which have committed to the goals in their annual report or can prove that they are making concrete moves in the direction of sustainability.
“Our approach is straightforward: we apply traditional investment rules to a select universe of companies that have committed to sustainability and implement their commitment in their business,” said Alfred Berkeley, chair of the fund. The results in its first year were remarkable: Its returns beat every other major fund. So, we attended the announcement of the latest results to find out if its first result was more than a fluke.
Cue the drumroll … Good practices yield good profits
At 3.15pm at the SDG Lab opposite Davos’ Congress Centre, the results were unveiled. The fund did not perform as well as last year, but this was to be expected with a difficult period for the markets over the last two months.
Overall, the fund has returned nearly 14 percent since 2017, which is better than every major fund apart from the Dow Jones. Alfred Berkeley, who was formerly President of the NASDAQ stock exchange and advisor to Bush, Clinton and Obama, said the results offer a major lesson to companies. “This performance demonstrates a solid challenge to competitors and highlights that responsible, socially conscious business is also profitable business, providing unique opportunities to support progress on the SDGs while also making an investment profit,” he said. “We’re about proving to investors that you can make a better than average return and proving to companies that it pays to be a sustainable company.”
SDGs on the corporate agenda
Perhaps more interesting than the fund’s results is the data it has now released on how companies are approaching the SDGs. It shows that more companies are focusing on the SDGs: analysis showed that over 85 percent of the largest 500 global corporations now disclose non-financial information as part of their legally-binding annual financial report. “It seems fair to conclude that the SDGs will become the globally accepted strategic roadmap by listed companies,” said Mr. Berkeley.
1. Read our Q&A with Fund Chair Alfred Berkeley.
2. Download our eBook on the ethical expectations of investors and consumers.