Sustainability and Financial Performance

Jan Anton van Zanten ()
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Jan Anton van Zanten: Osmosis Investment Management NL

Chapter 7 in Big Money, Better World?, 2026, pp 99-118 from Springer

Abstract: Abstract Can sustainable investing deliver financial returns – or does it sacrifice them on the altar of good intentions? This chapter examines one of the most contested questions in finance and finds that the answer is more nuanced than either side of the culture war debate admits. The evidence from decades of research suggests that sustainable portfolios tend to perform on par with conventional ones over the long run, offering comparable diversification and factor exposure – though year-to-year outcomes vary and results depend on how stringently sustainability criteria are applied. Beyond financial performance, sustainable investing offers emotional and expressive benefits by aligning money with values and harnessing reputations. Yet back-tests are an unreliable guide to a future shaped by forces that have no historical precedent. Physical risks from climate change and biodiversity loss are intensifying. Regulation is reshaping entire industries while courts are beginning to hold companies legally accountable for their environmental impacts. This chapter makes the case that sustainable investing is ultimately about anticipation: building portfolios resilient enough to navigate a world that is changing faster than historical data can capture – and positioned to benefit from the transition rather than be caught off guard by it.

Keywords: financial performance; sustainable investing; ESG returns; stranded assets; policy responses; diversification; physical risks; sustainable alpha (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-032-32442-9_7

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DOI: 10.1007/978-3-032-32442-9_7

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