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From the Stockholder to the Stakeholder: How Sustainability Can Drive Financial Outperformance

66 Pages Posted: 22 Oct 2014 Last revised: 6 Mar 2015

Gordon L. Clark

Oxford University - Smith School of Enterprise and the Environment

Andreas Feiner

Arabesque Asset Management

Michael Viehs

Oxford University Smith School of Enterprise and the Environment; European Centre for Corporate Engagement (ECCE)

Date Written: March 5, 2015

Abstract

In this enhanced meta-study we categorize more than 200 different sources. Within it, we find a remarkable correlation between diligent sustainability business practices and economic performance. The first part of the report explores this thesis from a strategic management perspective, with remarkable results: 88% of reviewed sources find that companies with robust sustainability practices demonstrate better operational performance, which ultimately translates into cashflows. The second part of the report builds on this, where 80% of the reviewed studies demonstrate that prudent sustainability practices have a positive influence on investment performance. This report ultimately demonstrates that responsibility and profitability are not incompatible, but in fact wholly complementary. When investors and asset owners replace the question “how much return?” with “how much sustainable return?”, then they have evolved from a stockholder to a stakeholder.

Notes: 'From the Stockholder to the Stakeholder' was co-authored by the Smith School of Enterprise and the Environment at the University of Oxford and Arabesque Asset Management. Funding was provided by Arabesque Asset Management.

Keywords: Sustainability, Corporate Social Responsibility, ESG, financial performance, cost of capital

JEL Classification: G23, G30, M14

Suggested Citation

Clark, Gordon L. and Feiner, Andreas and Viehs, Michael, From the Stockholder to the Stakeholder: How Sustainability Can Drive Financial Outperformance (March 5, 2015). Available at SSRN: https://ssrn.com/abstract=2508281 or http://dx.doi.org/10.2139/ssrn.2508281

Gordon L. Clark

Oxford University - Smith School of Enterprise and the Environment ( email )

South Parks Road
Oxford, OX1 3QY
United Kingdom
+44 1865 285197 (Phone)
+44 1865 285073 (Fax)

HOME PAGE: http://www.geog.ox.ac.uk/staff/glclark.html

Andreas Feiner

Arabesque Asset Management ( email )

68 Brook Street
London, W1K 5DZ
United Kingdom

HOME PAGE: http://www.arabesque.com

Michael Viehs (Contact Author)

Oxford University Smith School of Enterprise and the Environment ( email )

South Parks Road
Oxford, OX1 3QY
United Kingdom
+44-1865-614938 (Phone)

European Centre for Corporate Engagement (ECCE) ( email )

Tongersestraat 53
Maastricht, 6211LM
Netherlands

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