Does it pay to be responsible? Evidence on corporate social responsibility and the investment performance of Australian REITs

Westermann, Steffen; Niblock, Scott J.; Kortt, Michael A.

doi:10.1080/16081625.2019.1673188

Cited by 8 publications

(18 citation statements)

References 63 publications

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“…Westermann et al [104] observed that REITs in Australia that were highly committed to sustainability seemed to provide investors with better risk-adjusted returns, while lower rated portfolios experienced increasingly poor risk-adjusted returns. In their later study, Westermann et al [105] found that Australian green REITs seemed not to have better risk-adjusted returns, but that sustainability mitigated risks. However, they found that sustainable REITs might provide investors with better risk-adjusted returns during market downturns.…”

Section: Other Benefitsmentioning

confidence: 98%

“…These studies did not limit their definition of sustainability to green certificates, but typically relied on multiple sustainability indices and scoring systems. Sustainable REITS have been proven to improve financial performance in the U.S. [93,101], Europe [102,103], Australia [97,[104][105][106], Canada [107], and internationally [108,109]. However, the opposite results have also been found [110,111].…”

Section: Other Benefitsmentioning

confidence: 99%

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A Review of the Impact of Green Building Certification on the Cash Flows and Values of Commercial Properties

2020

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This study aims to review empirical research concerning the impact of green certificates on property cash flows and values, particularly from professional property investors’ perspective. The study uses discounted cash flows (DCF), a widely used property valuation method in income-generating properties, as a methodological framework. In this study, over 70 peer-reviewed studies were identified, categorized, and analyzed in the DCF framework. The reviewed studies indicated that certificates might increase the rental income and decrease the operating expenses, vacancy, and risks of a property. Together with the brand value of certificates, these enhancements should lead to an increase in property value. The number of studies has grown rapidly during the 2010s. Lately, studies have developed from asset-level to portfolio-level examinations. Although the reviewed studies found certification to be beneficial, the range of reported benefits was wide, and over half of the studies concentrated on U.S. commercial real estate markets, with a strong focus on LEED and ENERGY STAR certificates. From a property valuation perspective, applying these results to other markets and certificates might be challenging. Property values that fully reflect the environmental performance of properties would be a key to motivate mainstream investors to adopt sustainable property features.

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Section: Other Benefitsmentioning

confidence: 98%

Section: Other Benefitsmentioning

confidence: 99%

A Review of the Impact of Green Building Certification on the Cash Flows and Values of Commercial Properties

2020

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“…The general evaluation metric is computed as the arithmetic mean of the four categories' scores, thus varying between 0 and 100. It is noteworthy that the use of the CSRHub to assess firm CSR performance is increasing in the international literature (Arminen, Puumalainen, Pätäri, & Fellnhofer, 2018;Bouvain, Baumann, & Lundmark, 2013;Hughey & Sulkowski, 2012;Kang & Fornes, 2017;Mohamed & Salah, 2016, Vaia, Bisogno, & Tommasetti, 2017Westermann, Niblock, & Kortt, 2019).…”

Section: Models and Variablesmentioning

confidence: 99%

Effect of Diversity in the Board of Directors and Top Management Team on Corporate Social Responsibility

Prudêncio¹,

Forte²,

Crisóstomo

et al. 2020

SSRN Journal

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“…Building on the work of Westermann et al (2022) and adopting an innovative approach, this research attempts to address the question: Do ESG-rated energy and utility portfolios outperform? Using monthly returns and ESG scores of S&P/ASX 300 listed energy and utility firms, this paper explores whether ESG-rated investment portfolios outperform the market, a conventional "buy and hold" portfolio and each other from 2014 to 2022.…”

Section: Introductionmentioning

confidence: 99%

ESG and the performance of energy and utility portfolios: evidence from Australia

Niblock

2024

SEF

Self Cite

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Purpose This study aims to establish the effect of environmental, social and governance (ESG) practices on Australian energy and utility investment performance. Design/methodology/approach Conventional and ESG-rated portfolios are constructed using monthly returns and ESG scores of S&P/ASX 300 listed energy and utility firms from 2014 to 2022. Portfolio performance is estimated using a four-factor regression model, controlling for any economic shocks associated with the COVID-19 pandemic. Findings The findings show that the lower the ESG score associated with the overall ESG and environmental portfolios, the greater the performance compared to the market (but not the conventional and other ESG portfolios). High ESG scores do not appear to influence the performance of the energy and utility portfolios, which contrasts expectations that the uptake of ESG should deliver superior risk-return outcomes for investors. The findings also indicate that a contrarian investment approach may be a reasonable performance indicator for high-rated ESG portfolios. ESG practices did not impact portfolio performance during the COVID-19 pandemic. Originality/value This research has contributed to the literature by offering ESG investment insights for policymakers, regulators, fund managers and investors. Consistent with the agency perspective on ESG practices and efficient market hypothesis, the evidence implies that, regardless of ESG scores (either high or low), investors should consider investing passively in diversified energy and utility portfolios or low-cost index fund equivalents.

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Does it pay to be responsible? Evidence on corporate social responsibility and the investment performance of Australian REITs

Cited by 8 publications

References 63 publications

A Review of the Impact of Green Building Certification on the Cash Flows and Values of Commercial Properties

A Review of the Impact of Green Building Certification on the Cash Flows and Values of Commercial Properties

Effect of Diversity in the Board of Directors and Top Management Team on Corporate Social Responsibility

ESG and the performance of energy and utility portfolios: evidence from Australia

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