No, responsible investing does not mean lower returns.
RI is not driven by charity, morality or ideology, 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