December 15, 2003
Most investors believe that companies operating in a socially responsible manner not only pose a lower investment risk, but that they also provide higher returns on investment, according to a recent survey.
Some 71% of the 600 investors surveyed said they agreed that ethical companies presented less of an investment risk, while 68% said that companies operating with a higher level of integrity deliver higher returns, the Calvert Group study found. Calvert is the largest family of socially responsible mutual funds in the U.S., accounting for some $9 billion in assets under management.
Some 92% of investors in the study want their financial advisers to research ethical as well as financial performance before making a recommendation, and 79% say they are more interested in corporate governance than they were two years ago, the last time Calvert conducted this study.
Many investors are also seeking additional information about financial reporting and accounting issues at companies, spurred on by the fact that over three-quarters are less confident in the trustworthiness of corporate executives. Nearly two-thirds of investors feel the same way about the market as a whole.
To fix the problem, investors are generally in favor of corporate reforms that promote open and honest reporting, with a smaller number specifically targeting more reasonable executive compensation, greater shareholder voting and board diversity as areas that most need reform.
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