Ethical Investment Pay Analysis

755 Words4 Pages

Effect of Ethical Investment on Organizational Performance

Source: “Does Ethical Investment Pay?” by Ethical Investment Research Service

The above figure gives a rough model the variables which affects the shareholders price and how each of this variable will be impacted in case of ethical behaviour, policies or reflections involved in it. The model indicates the major links between the company, shareholders, employees, customers and government and the impact of ethics on a company’s cash flow in terms of costs, sales, and the cost of capital. The World Business Council for Sustainable Development6 stated “we are convinced that investment managers stand a good chance of improving their portfolio performance and reducing
…show more content…
Upside Factors: These were the factors which benefited the company in some or the other way, such as increased consumer demand due to increased ecological concern; increases in resource productivity; market share growth and new business development due to companies recognising the potential offered by the upside factors. Thus it can be said that though there were factors which would not suggest a company not in get into responsible investment but still there major factors which had evidence that responsible investment will always benefit in the long term sustainability of the organization. Also supporting this statement is a study conducted by Klassen and McLaughlin in 1996 which found that the marketplace rewarded companies that had constructed robust environmental management programs .On the contrary they found that environmental disasters such as oil spills witnessed a major decline in the company share prices.
Effect of ethical investment on organizational sustainability and the
…show more content…
Firstly, it can impact at the company level and secondly at the ethical portfolio level. There are several ways through which ethical behaviour/investment of the company could indirectly affect the organizational performance.


• Ethical investment is not only concerned with the investors but the organization as well as to how it invests within the organization for the functioning of various internal activities as well as investment externally.
• Ethical investment has an effect on the organizational performance and the brand image of the company.
• Not investing much of the time on responsible investment could get the company through in the short run but for long run sustainability of the organization which is on social, financial, ecological and political basis responsible investment is suggestable for the organization.
• With the instances of Levis, Maggi and Tata it can be clearly concluded that definitely ethical investment is major contributor for the sustainability of the organization
• Changing mind set of the investors as well as the customers could also be one of the reasons why organizations are looking forward for responsible
Open Document