Results from recent research into socially responsible investment are worrying to say the least.

According to Chris Brooks, professor of finance at Cass Business School, Stephen Brammer (University of Bath) and Stephen Pavelin (University of Reading), companies that have socially responsible investment policies deliver poorer investment returns than companies who have not been screened for their practices. The average return for the least socially responsible firms (ie firms that have achieved scores of zero on every social performance measure) was some 24% higher than for the most socially responsible firms, and was 17% higher than the average for the whole market. The authors commented: 'Our research suggests that ethical fund underperformance may be the result of bad stocks rather than bad fund managers.'

The research examined the relationship between corporate social performance and stock returns in the UK for the first time and appears to refute the argument that enhanced corporate social responsibility leads to enhanced returns. The analysis further showed that it was not possible to attribute the poor performance of socially responsible firms to the fact that the companies concerned were in inherently risky sectors, such as utility and mining rather than technology and advertising.

According to Professor Brooks: "If the sole objective is to maximise returns, it is still worth looking at CSR indicators, but in a negative way - invest in firms with the lowest scores because they will generate the highest returns."

The conclusions are worrying, but they are no surprise. Companies that cut social responsibility corners will almost inevitably produce better results in the short term. However, it would be interesting if the authors revisited the subjects of their research in 10 years time. I doubt if the winners of today would still be maintaining their advantage by then.