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Stock Market Values Responsible Companies, Says New Prize-winning Study

The 2005 Moskowitz Prize for Socially Responsible Investing was awarded to a new study, which claims that the stock market could provide a higher value to companies rated above-average on environmental issues.

The prize is awarded by the Center for Responsible Business Center at the Haas School of Business in cooperation with the Social Investment Forum, which promotes the concept, practice and growth of socially responsible investing.

The study—titled The Economic Value of Corporate Eco-Efficiency—found that “company managers do not face a tradeoff between eco-efficiency and financial performance, and that investors can use environmental information for investment decisions.” The study examined a long-running debate about environmental versus financial performance by focusing on the concept of eco-efficiency, a measure developed by Innovest Strategic Value Advisors.

“This study is important to help investors, managers, and policy-makers to understand the crucial question; the extent to which environmentally-friendly technologies and products are profitable,” said David Levine, professor of economics at the Haas School of Business and one of the Moskowitz Prize judges. “The results are clear: the stock market provides a higher value to companies that Innovest rates as above average on environmental issues,” added Levine.

Lloyd Kurtz, who is known as the “guiding spirit” behind the Moskowitz Prize and is a senior portfolio manager at Nelson Capital Management, an investment advisory affiliate of Wells Fargo, added: “We are delighted to recognize the strong work of this team from The Netherlands. With this award, two of the co-authors of this study—Rob Bauer and Kees Koedijk—become the first two-time winners of the Moskowitz Prize in its 10-year history. This underscores the growing importance and influence of European researchers in the ongoing debate about SRI.”

Nadja Guenster, Jeroen Derwall, Rob Bauer, and Kees Koedijk authored the study. Guenster, Derwall, and Koedijk and are affiliated with the Rotterdam School of Management at Erasmus University, and Bauer is affiliated with Limburg Institute of Financial Economics at Maastricht University. Co-authors Bauer and Koedijk are also past winners of the Prize, for the 2002 paper International Evidence on Ethical Mutual Fund Performance and Investment Style.

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• The Economic Value of Corporate Eco-Efficiency (Full Study)

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