Study: Corporate Social Responsibility Engagements With U.S. Public Firms Yield Excess Return Of 4.4 Percent

COLORADO SPRINGS, Colo., Oct. 3, 2012 /PRNewswire/ -- Using 10 years of privately compiled data, three leading academics have tied positive market performance to corporate social responsibility (CSR) activities at major publicly traded U.S. companies.  Their research has netted them the Moskowitz Prize for Socially Responsible Investing, the only global prize recognizing outstanding quantitative research in the field of sustainable, responsible, impact (SRI) investing.

Pietra Rivoli, deputy dean and professor, McDonough School of Business at Georgetown University and a longtime Moskowitz judge, presented the 2012 Moskowitz prize to the winners last night at the 23rd SRI Conference.  The prize-winners are: Elroy Dimson, emeritus professor of finance, London Business School; Oguzhan Karakas, assistant professor, Carroll School of Management, Boston College; and Xi Li, assistant professor, Fox School of Business, Temple University.

Dimson, Karakas, and Li examined highly intensive shareholder engagements on environmental, social, and governance issues from 1999 to 2009.  Their findings suggest that CSR activism creates shareholder value, consistent but in a different scale compared with traditional shareholder activism or hedge fund activism.

The winning paper, "Active Ownership," was previously presented as a working paper titled, "Activism on Corporate Social Responsibility," at the Inquire Europe & Inquire UK 2012 Spring Seminar and Financial Management Association 2012 European Conference.  The research shows that the average one-year abnormal return (also known as the excess or "alpha" return) after initial engagement is 1.8 percent—just in-between the excess return of 4.4 percent for successful CSR investor engagements with U.S. companies, and zero for unsuccessful ones.

The positive returns documented were most pronounced for engagements on the themes of corporate governance and climate change.  Firms with more reputational concerns and higher capacity to implement CSR changes were found more likely to be targeted by CSR activists, and more successful in achieving the engagement objectives.  Targeted firms experienced improvements in operating performance, profitability, efficiency, and governance indices after successful engagements.  The paper's findings provide new evidence on the value of shareholder activism on CSR issues.

Dozens of academic studies were submitted over the summer 2012 to be considered for the Moskowitz Prize.  Lloyd Kurtz, lecturer at the Berkeley-Haas Center for Responsible Business, Moskowitz Prize administrator, and chief investment officer at Nelson Capital Management, said:  "We had a very competitive year in 2012, with nine judges reviewing over 40 studies in detail, so the winning team can take credit for a very strong showing, and a very strong research effort."

The Moskowitz Prize encourages and recognizes outstanding academic research on matters germane to the field of responsible investing.  The $5,000 Moskowitz Prize is named for Milton Moskowitz, one of the first investigators to publish comparisons of the financial performance of screened and unscreened portfolios.

Since its inception in 1996, the Moskowitz Prize has been awarded annually at the SRI Conference, the largest and longest running conference serving investors and investment professionals in the sustainable, responsible, impact (SRI) investment industry in North America.  The SRI Conference is produced by First Affirmative Financial Network, and the Moskowitz Prize is managed by the Berkeley-Haas Center for Responsible Business.  More information about the prize is available at: http://responsiblebusiness.haas.berkeley.edu/programs/moskowitzresearchprogram.html.

The 2012 Moskowitz Prize sponsors include Calvert Group, First Affirmative Financial Network, Nelson Capital Management, Rockefeller and Co., Neuberger Berman, and Trillium Asset Management.

About the Center for Responsible Business at The Haas School of Business, UC Berkeley
The Center for Responsible Business (http://responsiblebusiness.haas.berkeley.edu) is an "action tank" that builds on the Haas School of Business' (http://www.haas.berkeley.edu) culture of innovation and UC Berkeley's tradition to run–not walk–towards social progress.  Building upon nearly a decade of research, teaching and industry engagement, the Center for Responsible Business brings together students, company leaders, and forward-thinking faculty to redefine good business for a sustainable future.

About The SRI Conference
The SRI Conference (http://www.SRIconference.com) is the premier forum for investors and investment professionals engaged in the sustainable, responsible, impact (SRI) investment industry.

About First Affirmative Financial Network
First Affirmative Financial Network, LLC (http://www.firstaffirmative.com) is an independent Registered Investment Advisor (SEC File #801-56587) offering investment consulting and asset management services through a nationwide network of investment professionals who specialize in serving socially conscious investors.  First Affirmative produces The SRI Conference (http://www.SRIconference.com).

SOURCE First Affirmative Financial Network, Colorado Springs, CO and Center for Responsible Business at The Haas School of Business, UC Berkeley, CA