Reviewing the fact sheet of socially responsible investing, the SRI investment performance is significant in generating returns for ethics investing, socially responsible investments, socially conscious investing, value investing, sustainable investing, social investing, and SRI – especially when you evaluate the increase in prevalence for socially responsible funds, socially responsible investment funds, SRI mutual funds, and corporate social responsibility.
As the world’s resources continue to shrink, consumers have grown increasingly concerned regarding sustainability and corporate social responsibility practices. From this awareness, in combination with the proven long-term profitability of social screens, socially responsible investing has also experienced significant growth.
Increasing prevalence of social investing
In one decade since 1995, the professionally managed portfolio dollars of socially responsible investments increased from $639 billion to $2.3 trillion, which significantly outgrew the overall market rates. In one decade since 1995, the professionally managed portfolio dollars of socially responsible investments increased from $639 billion to $2.3 trillion, which significantly outgrew the overall market rates. In one decade since 1995, the professionally managed portfolio dollars of socially responsible investments increased from $639 billion to $2.3 trillion, which significantly outgrew the overall market rates.
Growth in socially responsible investment funds
In 1995, there were only 55 socially responsible investment funds, with assets worth $12 billion. In 1997, this number of socially responsible funds grew to 139, and then to 168 in 1999. By 2005, over 201 SRI mutual funds became available in the United States alone, totaling $179 billion in assets. Approximately 51% of the social investing assets are from new socially responsible funds, while the remaining 49% stem from the growth from SRI assets already in existence. In a stark contrast to the unscreened mutual funds who have been plagued with general lack of popularity among the financial community, socially responsible investment mutual funds have been growing significantly – outpacing the growth in traditional mutual funds. According to Lipper, SRI mutual funds grew by $1.5 billion in capital inflows during 2002, while the non-socially screened mutual funds lost $10.5 billion in capital outflow.
Enacting change through socially responsible investment strategies
Shareholder activism continues to gain steam in socially responsible investing. Between 2002 and 2003 alone, the number of shareholder proposals that were voted upon during corporate annual meetings increased 30%, according to the Investor Responsibility Research Center. Community investing has been the fastest growing strategy of socially responsible investments. Between the years 1995 to 2005, the socially responsible funds placed into community investing increased by 388%, growing from $4 billion to $20 billion.
Comparable socially responsible investment performance to non-screened investments
Socially responsible investment funds continue to demonstrate their ability to match or outperform their full market diversified counterparts. For example, the Domini 400 has outperformed the S&P 500, with 11.75% and 11.21% annualized returns from socially responsible investments respectively.
In Corporate Knights magazine’s three year survey, 75% of the 54 Canadian socially responsible outperformed their 3,800 unscreened counterparts.
The bottom line? Social investing generates significant social and financial returns.
Clearly, socially responsible investing is gaining steam in prevalence, as well as in it strength to influence corporate governance practices. However, in terms of socially responsible investment portfolio returns, socially conscious investing can match or even outperform its unscreened counterparts – demonstrating that a socially responsible investor does not have to forgo financial returns to support positive social changes!
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