Socially responsible investing isn't just for stocks anymore, and one Wall Street firm is trying to get clients to consider applying the same principles to corporate bonds.
The upshot, according to a study Barclays released this week, is that using benchmark guidelines under principles of ESG scoring — environment, society and governance — investors can put together an ethical portfolio that also provides returns.
"We found that the performance does not suffer and even benefits, and this doesn't come at the expense of the market becoming high priced," Lev Dynkin, managing director and head of the Quantitative Portfolio Strategy Group at Barclays Research, said in an interview. "We hope it will give encouragement to investors to build in ESG bond characteristics in portfolio construction on a permanent basis."
Using corporate behavior in ethics and environmental impact when making investment decisions is nothing new. Some $6.57 trillion — or 1 of every 6 dollars under professional management in the United States — is committed to the strategy, according to the Forum for Sustainable and Responsible Investment.