Tuesday, 21 December 2010

Green Investing - Returns Performance Evidence Inconclusive

The EDHEC Risk Institute's November 2010 Adoption of Green Investing by Institutional Investors: a European Survey contains the chart below that conveniently summarizes available research on the financial performance of green investing. Some studies say green investing provides worse performance, some say it does better and some say it does the same.

In their survey of European institutional investors, authors Noel Amenc, Felix Goltz and Lin Tang found that almost 90% already pursue Green investing as an investment theme and 90% intend to do more. Not surprisingly to anyone who has looked beyond the mere phrase to try understanding what Green investing entails, the biggest obstacle is the lack of credible standards in the field.

One finding that may surprise those who have an unwavering negative view of the institutions of society: the motive for doing Green investing by these institutional investors in more than 80% of cases is simply a sense of responsibility to the planet and society.

A surprise for me is that equity/ buying stocks is not the only way to go. Bonds are a Green investing option too as the table below shows. At least they are for European investors. Canadian investors do not have such a choice available. Maybe an option for our federal government to consider?

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