Green investing proves a winning strategy - study

ZURICH Thu Nov 13, 2008 12:18pm EST

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ZURICH Nov 13 (Reuters) - Companies that seek to reduce their environmental impact or make workplaces safer can boost their share performance, a study published by Bank Sarasin & Cie showed on Thursday.

Investing in firms with sustainable business practices, a strategy known as socially responsible investing or SRI, can yield higher returns than using strategies that focus only on a company's financial performance, the report indicated.

"When companies control their value chain across the production process, this can translate into better management of the business overall, and ultimately better financial performance as well," said Sarasin spokesman Harald Melzer.

Firms which devote resources towards improving the sustainability of their business, for example by cutting their emissions or improving safety at work, may see their share price outperform that of their rivals, the study found.

"I believe that over the last three to four years sustainability, and in particular climate change, has become more of a focus for investors," said Eckhard Plinke, head of sustainability research at private bank Sarasin.

The study was based on Bank Sarasin's sustainability ratings of around 460 European and U.S. companies and it sought to establish whether there was a link between a company's sustainability and its share performance.

The findings undermine arguments that a focus on sustainability can distract management and damage a company's financial performance, ultimately depressing its share price.

The research report was produced by Sarasin with the Center for Corporate Responsibility and Sustainability at the University of Zurich and the Mannheim, Germany-based Centre for European Economic Research.

(Editing by Elaine Hardcastle)

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