ADOPTING ethical policies adds no value to a company's worth, according to a new study.
Researchers at the universities of Edinburgh and Leeds found combating corruption and meeting high environmental, human rights and labour standards does nothing to improve a firm's share price.
The study tracked stock market reaction to com-panies being added to the FTSE4Good index – a listing in which businesses must meet socially responsible criteria, including environmental sustainability, universal human rights and good labour standards.
The research studied 356 businesses added to the FTSE4Good index from July 2001 to March 2008 and found any gains were quickly reversed.
Some businesses, such as Carphone Warehouse, Selfridges and JJB Sports, even experienced a negative stock market reaction to being added to the index.
Jens Hagendorff, finance and investment professor at the University of Edinburgh Business School, said: "Investors do not take companies' claims that being socially responsible is in the company's interest at face value."
The only companies that benefited from a sustained increase in share price were the biggest 20% of those studied.
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