Abstract
The concern over the sustainability of mankind's use of natural resources has found a receptive audience in many parts of the world. As evidence of environmental challenges continue to grow, it is likely that sustainability issues will be raised by financial institutions, especially those exposed to property loss or product liability. Given this backdrop, it is not surprising that there have been a number of studies attempting to answer the question of whether "social responsibility" or "sustainability" improves or detracts from investment performance. While a number of studies based on the performance of socially responsible mutual funds have attempted to answer the performance question, they have limitations, since there are a number of factors, such as manager skill, that also meaningfully affect returns. However, the results of analysis support the assertion that sensitivity to environmental issues, particularly for the extreme performers, may enhance return of an active strategy over time.