Profitability comparative analysis: a corporate Sustainability Index Study

Elias Hans Dener Ribeiro da Silva Edson Pinheiro de Lima Sérgio Eduardo Gouvêa da Costa Ângelo Márcio Oliveira Sant'Anna About the authors

Abstract

Organizations have been striving to show society their policies of good social and environmental practices; consequently, they have been increasingly investing in socially responsible actions, one of the reasons for the growing creation of indexes of corporate sustainability. Many studies have been conducted on the ISE - Corporate Sustainability Index - of BM&F Bovespa to verify whether the portfolio composed of sustainable companies brings higher return to shareholders than other portfolios of regular companies. However, most of these researches focus on the stock value as a way to generate value, and there are few studies focusing on fundamental analysis. The main purpose of this paper is to compare fundamentalist profitability indicators between a group of companies that compose the ISE index and a reference group, verifying whether sustainable management improves business profitability, and how it creates value for shareholders. The groups were compared; the evidences found by using the t-student statistical test show that in spite of having a differentiated theoretical portfolio, focused on social, environmental and ethical issues, the profitability of companies that compose the ISE Group is similar to or lower than that of companies of the reference group. Nevertheless, the results show that the companies of the ISE Group have other ways to create shareholder value, such as lower volatility and risk exposure.

Keywords:
ISE; Sustainability; Fundamental analysis; Value

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