NEW YORK (The Street) -- A company's financial metrics can be largely ignored in the search for good investment return.
That's the counterintuitive message from Osmosis Investment Management, which instead uses three hurdles to select companies: their energy consumption, water consumption and waste management.
The fund manager has found such strong correlation between return and the sustainable basis on which companies are run that it is confident placing its criteria above traditional metrics.
Osmosis Investment Management Partner Ben Dear says the managers' funds are still pitched on the basis of return.
"You could never sell SRI (socially responsible investing) to institutions, they'd say 'speak to the guy down the corridor and he'll give you 30 basis points (a small portion)," Dear said on the mindset of large investors.
"The only way to get investment is to benchmark our returns to other global equity managers, and our approach stacks up."
The UK-based MoRE World fund has average annualized returns of 16.8% over the 9 years to 2013 against an 8.5% return for the MSCI World Index.
Socially responsible investment strategies are still striving to gain broader credibility in the financial community, though companies are increasingly aware of reputational damage from failing to be socially responsible for their resource consumption.
Osmosis chief executive Gerrit Heyns said the manager used publicly available data to assess the resource use of large companies, with a strong link between those that were socially responsible and had high returns on assets, equity and a lower debt to capital ratio.
He noted that Brazil, South Africa and South Korea produced good data on company resource use while nearly all of the UK's FTSE 100 companies disclosed this information. "The U.S. is woefully behind the rest of the world, with no guidelines for companies to produce this data," Heyns said.