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AMP Capital Shows Link Between Corporate Responsibility and Strong Financial Performance

30 March 2005

AMP Capital Investors Limited Press Release

AMP Capital Investors today released research showing strong financial performance can be directly linked to good corporate responsibility.

AMP Capital Investors’ Head of Sustainable Funds, Michael Anderson said that while extensive research in this area has been carried out in North America and Europe very little has been undertaken in Australia.

“Since its inception, the AMP Capital Sustainable Australian Share Fund has consistently outperformed the ASX200 Index. We were interested to know to what extent the fund’s outperformance could be related to the corporate sustainability criteria of the fund,” Mr Anderson said.

The research looked at the two criteria used by the fund when assessing the socially responsible nature of a company, namely corporate social responsibility (CSR) and industry sustainability (IS).

The first criteria, corporate social responsibility (CSR) was evaluated on a company’s ability to fulfil its financial and legal responsibilities to all its stakeholders, as well as how well it manages its workplace environmental and supply chain issues and its reputation in conducting business.

The second criteria, industry sustainability (IS) was reviewed by looking at the broader social, economic and technological trends that could have a tangible impact on a company’s future strategic and financial position.

Share price data was analysed to determine if a socially responsible investment philosophy offers companies a competitive financial advantage.

The results of the research showed that over four and 10 year periods, the impact of corporate social responsibility on company performance was positive. Companies with a higher corporate social responsibility rating outperformed by more than 3% per annum over four and 10-year periods after removing the effects of other identified factors.

The performance of companies selected by Industry Sustainability is less clear statistically, although after excluding the unusual performance of the IT&T sector, the study shows high IS-ranked companies outperformed over 10 years. A clearer picture will require an even longer-term study to deal with the length of market cycles within industries.

“This research, in combination with other international studies, provides support for the assertion that socially responsible criteria can help to identify outperforming companies.

“The results of our research, combined with the strong performance of the AMP Sustainable Australian Share Fund shows investors are able to achieve great returns without compromising their values,” said Mr Anderson.

Media enquiries:
Jillian Maxwell
02 9257 2766
0411 886 859
jillian.maxwell@ampcapital.com

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