Understanding better means investing better for the long term
Before investing in a company – through equities or bonds – the portfolio manager undertakes a disciplined analysis of its economic and financial fundamentals, including its balance sheet, business model, sector outlook, etc. This enables the manager to put a financial estimate on its value and to see if the investment makes sense.
Such a step is essential but not sufficient.
SRI deepens the overall insight by analysing the company’s performances in three additional areas:
- Environment: pollution and “green” products (eco-designed);
- Social: human resources, employee health-care and safety, human rights;
- Governance: balance of powers, business ethics.
A more comprehensive analysis of the company provides for more robust investments.
Contrary to popular thinking, there is no difference in financial performance between SRI and traditional investment!