Social Investment Forum

Trends According to a recent Social Investment Forum study, SRI is still expanding at a healthy rate. SRI assets reached over $3 trillion at the beginning of 2010, up more than 380 percent from $639 billion in 1995, when the first report covering these statistics was released by the Social Investment Forum.

SRI assets have increased by 34% since 2005, while assets that are traditionally managed have only increased by 3%. In addition, traditional, professionally managed assets increased by only 13% while SRI assets increased by less than 1% from 2007 to the beginning of 2010 (during the recession).

Today, approximately one dollar out of every eight is invested in a socially responsible investment.

The Social Investment Forum credits client demand and, to a lesser extent, legislation and regulation for the majority of this expansion.

STRATEGIES FOR INVESTING There are basically three SRI investment strategies:

Negative and Positive Screening:

Positive screening involves actively looking for good businesses. It lets investors choose businesses whose business practices are in line with their values. For instance, an investor might decide to put their money into a solar energy company if they are particularly concerned about safeguarding the environment.

Many people believe that investing in businesses that support environmental or social causes necessitates sacrificing performance; however, it appears that the opposite is true. The author of Profitable Socially Responsible Investing, Marc J. Lane, discovered that businesses with the highest scores for social and environmental issues actually had better financial results. In point of fact, Lane claims that during the course of his eight-year research, the stocks of those businesses outperformed the Russell 3000 Index by more than 2.5 percent.

The process of weeding out businesses whose business practices or products or services do not align with social good is known as negative screening. This traditionally included tobacco, firearms, alcohol, gambling, and defense contractors for the majority of SRI investors. However, it has also been expanded to include businesses whose management has failed to promote diversity, equality, environmental responsibility, or employee diversity.

Activism by Shareholders Activism by Shareholders is the process of attempting to influence changes in corporate policies or practices by speaking directly with management or by submitting shareholder resolutions for approval by the company’s shareholders. The annual number of shareholder resolutions filed was less than 20 when the concept of shareholder activism was first introduced. The Social Investment Forum reports that over 200 institutions submitted shareholder proposals between 2008 and 2010, with many of them being adopted.