Weighing the Price of Social Responsibility

What’s the relationship between stock performance and corporate ethics? Based on an analysis of the public companies that made it onto this year’s list of the World’s Most Ethical Companies, there’s very little.

One-year stock returns among the companies that made the 2012 list ranged from more than 47% to a loss of nearly 72%.

While many investors like the idea of socially responsible investing, the results show that ethics alone are no guarantee of strong financial performance. And they make suggestions that “doing the right thing is actually good for business” — as says the head of the New York City think tank that has been compiling the annual list for the past six years — somewhat harder to believe. Read more…

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