It pays to be ethical

(First published in Norwegian 01 Oct 2004)

By David Stenerud
Norwatch

A healf-year index for ethical investments show that ethically selected investment universes have been clearly more profitable that non-screened portfolios.

The difference is greatest in Denmark, but also in Norway it has paid off to invest ethically since 1 January 2000.

All Nordic countries
It is the Swedish advisory company for ethics and investments, GES Investment Services (GES Invest), formerly Caring Company, who launch the service on Friday, 1 October.

The index is composed of listed companies on the Stockholm, Oslo, Helsinki and Copenhagen stock markets, other than companies that do not meet certain ethical criteria.

«GES Investment Services will analyse the companies every six months based on the ethical criteria that make up the GES Global Ethical Standard and GES Controverial models of analysis. The criteria are based on international standards for the environment, human rights, and business ethics. In addition, companies with production and/or sales of weapons, tobacco, alcohol and gambling will be excluded,» according to a press release from GES Invest on Friday.

GES Ethical – Oslo Stock Exchange: 38-30
The ethical indices have, according to GES Invest, had a clearly higher return than comparable indices.

Return                                                            Return of
2/1/2002                                                        comparable
– 29/9/2004                                                   index

SIX/GES Ethical Index Nordic: 9%             SHB Nordiska 
                                                                        Portfolio Index 
                                                                        (eff): 4%
SIX/GES Ethical Index Denmark: 36%    KBX Cap GI: 19%
SIX/GES Ethical Index Finland: 34%         HEX Portfolio 
                                                                         Yield: 18%
SIX/GES Ethical Index Norway: 38%         Oslo Börs Mutual 
                                                                          Fund Index: 30%
SIX/GES Ethical Index Sweden: 3%          SBX Cap GI: 3%

«The index is not proof that it is always profitable to invest ethically. It can be a coincidence, and it may change in the course of half a year,» argues director Erik Alhøj at GES Services in Denmark to the Kristelig Dagblad newspaper of Denmark. «But we do still believe that it is economically wise to invest sustainably.»

Unethical porn?
Probably the main explanation for the comparatively large gap between ethical and non-screened investment universes in Denmark lies in the poor performance of both Carlsberg and TDC.

Carlsberg is excluded from the good, ethical companies because of alcohol, while TDC is excluded because of dealings in pornography through its web-TV businesses.

«One can of course discuss whether its reasonable to call TDC unethical for that reason,» admits GES Invest Danmark’s Erik Alhøj.