No, responsible investing does not mean lower returns.
RI is not driven by charity, morality or ideology â€“ it is driven by the business case of enhanced returns, especially when investing for the long term. RI does not imply that investors should compromise their risk/return standards.
In fact, the opposite is true: RI is an approach designed to protect and possibly enhance long-term risk adjusted returns. It is important to note that:
- Negative screening and exclusion strategies, which over the short-term may create deviations from a benchmark, both positive and negative, are just a subset of responsible investment that can be used selectively by investors, preferably in combination with active ownership strategies
- Pension funds should ideally take a long-term view on investments, thus short-term performance deviations from a benchmark may become less relevant.
Please also see the FAQ article regarding ESG and financial performance