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Investment principles

In analysis for Norway’s sovereign wealth fund, Elroy Dimson of Cambridge Judge Business School outlines principles for responsible investment.

Investment principles

Professor Elroy Dimson

Elroy Dimson, Chairman of the Newton Centre for Endowment Asset Management at Cambridge Judge Business School, outlined some key principles for responsible investing in a recent article entitled “A framework for responsible investing” in the Huffington Post.

Acknowledging that the term “responsible investing” is interpreted in different ways by different people, the article draws on research conducted by Dimson and other members of the Strategy Council for the Norwegian Government Pension Fund Global, one of the world’s largest sovereign wealth funds.

Because investors are often “vague” in their statements about responsible investing, the article uses analysis to identify five key reasons why investors seek to invest responsibly: to avoid unethical products, avoid firms with unethical conduct, be responsive to interest groups, ensure benefits of universal ownership and enhance performance through sustainability.

In their report to the Norwegian government, Dimson and his colleagues on the Strategy Council made a series of 10 recommendations on responsible investing. These include clarifying objectives for such investment, backing policy changes that enhance portfolio value and disclosing responsible investment principles and ownership strategies.