High Road Businesses that act better can often do better. And, as a result, those who invest in them may often end up doing better as well.
Why is that the case?
Recently, a team of Harvard Business School professors set out to test whether a company's High Road policies made any appreciable difference – and, if they did, what kind of policies mattered.1
They looked at the performance of 180 companies over the course of 16 years. Of these, ninety were High Road companies that had actively adopted significant and relevant environmental, social and governance policies. There were also 90 similar firms in the same sectors that had statistically identical size, capital structure, operating performance, and growth opportunities. These Low Road companies were much less likely to have embraced such approaches.
For example, the High Road companies were about twice as likely to link executive pay to environmental performance, three times as likely to keep track of the number of fatalities in the workplace, and nearly two and a half times more likely to give the Board of Directors specific responsibility around sustainability.
Their study found that $10,000 invested in a High Road company would, sixteen years later, be worth $283,600, but that same $10,000 invested in a similar Low Road company would only have grown to $146,000. And an investment in High Road companies would have had less volatile ups and downs along the way.