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June 07, 2013

Gulf Persists Between Corporate Sustainability Claims and Performance
    by Robert Kropp

Sixty percent of corporate respondents to an oekom research survey suggest that rating agencies and sustainable investors influence strategy. -- Sustainable investors should find the responses from 199 companies, headquartered in nearly 30 countries and representing 34 industry sectors, to a recent survey by oekom research encouraging. Almost two-thirds of corporate respondents told oekom that two prominent investment strategies—a best-in-class approach and shareowner engagement—influence their sustainability strategies.

While such a response is encouraging on the face of it, the fact remains that negative screening continues to be the overwhelming investment approach for the $13 trillion in assets under management devoted to sustainable investment strategies.

"Investors wishing to influence companies' sustainability performance would be well advised to make use of the best-in-class approach and dialogue with companies,' Robert Haßler of oekom said. "Sustainable investment could be much more effective overall if sustainable investors made more use of these two strategies."

About the same percentage of respondents also said that sustainable ratings agencies had a decisive influence on their strategies, often "prompting them to tackle the issue of sustainability in the first place," oekom reports. Only customer demand was of more critical import, the companies said.

"Socially responsible investments and sustainability ratings motivate the majority of companies to make a greater commitment to sustainable development," oekom concluded. "Access to the capital market makes an important business case for the integration of sustainability criteria into company management. One of the key motives of sustainable investors is thus fundamentally addressed."

Almost every company surveyed acknowledged the importance of sustainable development to future corporate performance. However, oekom continues, "We will come straight to the point here. The companies' self-assessment… regarding the importance of the sustainability model and the current status of relevant activities, does not stand up to external scrutiny."

Recent research conducted by oekom rated only one in six of the companies from the
MSCI World Index as demonstrating a good level of commitment to sustainable development. not a single company in the Index has yet qualified for a rating of very good from oekom.

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