Good corporate governance and a focus on environmental and social issues by companies lead to higher share price performance, according to a new study released on Monday.

The study by the Smith School of Enterprise and the Environment at the University of Oxford and Arabesque Asset Management found that such practices lower the cost of capital for a company and ultimately translate into cashflows.

“Based on the growing trend that we are seeing of sustainability entering the corporate mainstream, we believe that the most successful future investors will be those with continuous research programmes that analyze a range of ESG (environmental, social and governance) factors,” said Andreas Feiner from Arabesque Asset Management.

“Sustainability and profitability can go hand in hand.”

The study, based on almost 200 academic researches, industry reports and books, said factors such as good workforce relations, environmental management and executive compensation had a high impact on improvement.

Source: Reuters