Good Deeds Deliver

“Especially in environmental matters, the link between socially responsible practices and shareholder returns is becoming evident. That’s because a company’s ability to deal successfully with environmental issues can be a credible measure of management quality, which is notoriously tricky to gauge, contends Frank Dixon, managing director with Innovest Strategic Value Advisors, New York. Management teams that excel in handling environmental issues, which come with a morass of technical, market, and regulatory problems, are likely to do a good job overall, says Dixon. In fact, Innovest’s research has shown that stocks of companies with above-average environmental performance outperform their competitors by three to 25 percentage points annually. Dixon explains, ‘The concept of fiduciary responsibility is beginning to change, to consider that environmental and social factors are relevant to the bottom line.'”