Developing a socially responsible property investment index for UK property companies
| DOI | https://doi.org/10.1108/14635780910982368 |
| Pages | 511-521 |
| Date | 07 August 2009 |
| Published date | 07 August 2009 |
| Author | Graeme Newell |
| Subject Matter | Property management & built environment |
Developing a socially responsible
property investment index for
UK property companies
Graeme Newell
Schoolof Economics and Finance,University of WesternSydney, Sydney,Australia
Abstract
Purpose – Socially responsible property investment (SRPI) has taken on increased significance in
recent years, as property investors have given an increased priority to environmental, social and
governance issues in their property investment decision making. The purpose of this paper is to
establish SRPI performance indices for UK property companies and empirically benchmark their
risk-adjusted performance and portfolio diversification benefits over recent years.
Design/methodology/approach – Using five socially responsible investment (SRI) performance
eligibility criteria, the UK property companies contributing to these SRI measures are identified. These
UK property companies are used to establish a number of SRPI market cap-weighted performance
indices over 2003-2008. These SRPI performance indices are used to assess the risk-adjusted
performance and portfolio diversification benefits of UK SRPI property companies.
Findings – This paper objectively identifies the UK property companies actively involved in SRPI
and finds that the UK SRPI property companies delivered superior risk-adjusted returns than the
overall UK property companies sector, with this performance being achieved with no loss of portfolio
diversification benefits.
Originality/value – Much of the previous SRPI research has focused on the broad concept of SRPI
with no empirical analysis. This paper is the first attempt to rigorously and empirically assess the
risk-adjusted performance of UK SRPI property companies by establishing SRPI performance indices
for UK property companies. Given the increasing significance of SRPI, this research enables
empirically validated, more informed and practical investment decision making regarding the
performance-based supporting of the SRPI agenda by property investors.
Keywords Social responsibility, Property, Investments, Businessperformance, Benchmarking,
United Kingdom
Paper type Research paper
Introduction
Corporate social responsibility (CSR) has taken on increased importance inrecent years
(Capaldi, 2005; Sparkes and Cowton, 2004), as investors have given an increased
priority to environmental, social and governance issues in their investment decision
making and companies have focused on the triple bottom line. This has seen socially
responsible investment (SRI) become an integral part of the investment markets, driven
by customer pressure, changes in business practice, government legislation and
pressure, SRI increased demand, changes in employee expectations, and evidence of
poor corporate business practices/standards (Capaldi, 2005; Dawson, 2004; Pryce, 2002;
Roberts et al., 2007). This now sees over $4 trillion in SRI globally, including the USA
($2.7 trillion), Europe (e1 trillion), Canada ($504 billion) and Australia ($53 billion)
(Eurosif, 2007; Hoppe and Oulton, 2006; RIAA, 2007; SIF, 2007).
The international significance of SRI has seen the development of both global
and local SRI initiatives, including the UN Principles of Responsible Investme nt,
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SRPI index for
UK property
companies
511
Journal of Property Investment &
Finance
Vol. 27 No. 5, 2009
pp. 511-521
qEmerald Group Publishing Limited
1463-578X
DOI 10.1108/14635780910982368
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