Even as investors demand more corporate social responsibility (CSR) from the companies they invest in and a social revolution is sweeping Israel, a new study by researchers at BGU has determined that investing in companies who take a CSR approach does not result in weaker stock portfolios.
Corporate social responsibility includes a number of elements that only recently have begun to gain in importance when gauging a company’s value over and above the bottom line. They include: how the company treats its employees, its environmental impact, how the company interacts with the community in which its offices are based, and other related factors. There is no single international standard but the United Nations has been active in promoting CSR as have other organizations.
Student Zvi Amrusi performed a comparative study of stocks of companies with a declared CSR policy and non-declared CSR companies traded in Israel and the US between 2004 and 2009. He undertook the study as part of his master’s thesis under Prof. Rami Yosef, Dr. Ilanit Gavious and Dr. Hagai Katz of the Department of Business Administration in the Guilford Glazer Faculty of Business and Management.
Amrusi examined 39 companies listed on the US Dow Jones Sustainability Indexes (DJSI) between 2004 and 2009 and 19 companies listed on the Israeli Maala CSR from July 2010. His analysis revealed that the stocks of such companies performed as well as their counterparts.
“In Israel and in the US, the results bear the same message: investing in ethical stocks does not hurt your returns,” Amrusi said.
The researchers believe that in the long-term, the public will actively seek out and identify those companies which contribute to society and reward them by investing in their stocks.
