Socially responsible investing

Alternative Energy: One of many forms of sustainable investing

Socially responsible investing (SRI), or Social investment is also known as sustainable, socially conscious, "green" or ethical investing, is any investment strategy which seeks to consider both financial return and social good to bring about a social change.

Recently, it has also become known as "sustainable investing" or "responsible investing." There is also a subset of SRI known as "impact investing," devoted to the conscious creation of social impact through investment.

In general, socially responsible investors encourage corporate practices that promote environmental stewardship, consumer protection, human rights, and diversity. Some avoid businesses involved in alcohol, tobacco, fast food, gambling, pornography, weapons, contraception/abortifacients/abortion, fossil fuel production, and/or the military.[1] The areas of concern recognized by the SRI practisioners are sometimes summarized under the heading of ESG issues: environment, social justice, and corporate governance.

"Socially responsible investing" is one of several related concepts and approaches that influence and, in some cases govern, how asset managers invest portfolios.[2] The term "socially responsible investing" sometimes narrowly refers to practices that seek to avoid harm by screening companies included in an investment portfolio.[3] However, the term is also used more broadly to include more proactive practices such as impact investing, shareholder advocacy and community investing.[4] According to investor Amy Domini, shareholder advocacy and community investing are pillars of socially responsible investing, while doing only negative screening is inadequate.[5]

History

The origins of socially responsible investing may date back to the Religious Society of Friends (Quakers). In 1758, the Quaker Philadelphia Yearly Meeting prohibited members from participating in the slave trade – buying or selling humans.

One of the most articulate early adopters of SRI was John Wesley (1703–1791), one of the founders of Methodism. Wesley's sermon "The Use of Money" outlined his basic tenets of social investing – i.e. not to harm your neighbor through your business practices and to avoid industries like tanning and chemical production, which can harm the health of workers. Some of the best-known applications of socially responsible investing were religiously motivated. Investors would avoid “sinful” companies, such as those associated with products such as guns, liquor, and tobacco.

The modern era of socially responsible investing evolved during the political climate of the 1960s. During this time, socially concerned investors increasingly sought to address equality for women, civil rights, and labor issues. Economic development projects started or managed by Dr. Martin Luther King, like the Montgomery Bus Boycott and the Operation Breadbasket Project in Chicago, established the beginning model for socially responsible investing efforts. King combined ongoing dialog with boycotts and direct action targeting specific corporations. Concerns about the Vietnam War were incorporated by some social investors.[6][7] Many people living during the era remember a picture in June 1972 of a naked nine-year-old girl, Phan Thị Kim Phúc, running towards a photographer screaming, her back burning from the napalm dropped on her village. That photograph channeled outrage against Dow Chemical,[8] the manufacturer of napalm, and prompted protests across the country against Dow Chemical and other companies profiting from the Vietnam War.

During the 1950s and 1960s, trade unions deployed multi-employer pension fund monies for targeted investments. For example, the United Mine Workers fund invested in medical facilities, and the International Ladies' Garment Workers' Union (ILGWU) and International Brotherhood of Electrical Workers (IBEW) financed union-built housing projects.[9] Labor unions also sought to leverage pension stocks for shareholder activism on proxy fights and shareholder resolutions. In 1978, SRI efforts by pension funds was spurred by The North will Rise Again: Pensions, Politics, and Power in the 1980s and the subsequent organizing efforts of authors Jeremy Rifkin and Randy Barber. By 1980, presidential candidates Jimmy Carter, Ronald Reagan and Jerry Brown advocated some type of social orientation for pension investments.[10]

SRI had an important role in ending the apartheid government in South Africa. International opposition to apartheid strengthened after the 1960 Sharpeville massacre. In 1971, Reverend Leon Sullivan (at the time a board member for General Motors) drafted a code of conduct for practicing business in South Africa which became known as the Sullivan Principles. However, reports documenting the application of the Sullivan Principles said that US companies were not trying to lessen discrimination in South Africa. Due to these reports and mounting political pressure, cities, states, colleges, faith-based groups and pension funds throughout the US began divesting from companies operating in South Africa. In 1976, the United Nations imposed a mandatory arms embargo against South Africa. From the 1970s to the early 1990s, large institutions avoided investment in South Africa under apartheid. The subsequent negative flow of investment eventually forced a group of businesses, representing 75% of South African employers, to draft a charter calling for an end to apartheid. While the SRI efforts alone did not bring an end to apartheid, it did focus persuasive international pressure on the South African business community.

The mid and late 1990s saw the rise of SRI’s focus on a diverse range of other issues, including tobacco stocks, mutual fund proxy disclosure, and other diverse focuses.

Since the late 1990s, SRI has become increasingly defined as a means to promote environmentally sustainable development.[11] Many investors consider effects of global climate change a significant business and investment risk. CERES was founded in 1989 by Joan Bavaria and Dennis Hayes, coordinator of the first Earth Day, as a network for investors, environmental organizations, and other public interest groups interested in working with companies to address environmental concerns.[12]

Since 1989, representatives from the SRI industry have gathered at the annual SRI in the Rockies Conference to exchange ideas and gain momentum for new initiatives. This conference is produced by First Affirmative Financial Network, an investment advisory firm that specializes in sustainable and responsible investing. The conference has attracted over 550 persons annually since 2006.[13]

The first sell-side brokerage in the world to offer SRI research was the Brazilian bank Unibanco. The service was launched in January 2001 by Unibanco SRI analyst Christopher Wells from the São Paulo headquarters of the bank. It was targeted at SRI funds in Europe and the US, although it was sent to non-SRI funds both in and out of Brazil. The research was about environmental and social issues (but not governance issues) regarding companies listed in Brazil. It was sent for free to Unibanco's clients. The service lasted until mid-2002.

Two good things came out this research:

  1. The idea was picked up by Mike Tyrrell, who worked at Jupiter, an SRI fund manager in London, and who developed it into something much bigger and better at HSBC and then Citigroup.
  2. ABN AMRO's operation in Brazil used this research to create the first SRI fund in an emerging market, launched in November 2001. As of late 2008, this fund, called Fundo Ethical, was the Brazilian operation's biggest and best performing stock fund of any kind. (ABN AMRO's operation in Brazil was bought by Santander in 2007.)

Drawing on the industry's experience using divestment as a tool against apartheid, the Sudan Divestment Task Force was established in 2006 in response to the genocide occurring in the Darfur region of the Sudan.[14] Support from the US government followed with the Sudan Accountability and Divestment Act of 2007.

More recently, some social investors have sought to address the rights of indigenous peoples around the world who are affected by the business practices of various companies. The 2007, SRI in the Rockies Conference held a special pre-conference specifically to address the concerns of indigenous peoples. Healthy working conditions, fair wages, product safety, and equal opportunity employment also remain headline concerns for many social investors.[15] In the mid-2010s, some funds developed gender lens investing strategies to promote workplace equity and general welfare of women and girls.[16]

Current strategies

Socially responsible investing is a growing market in both the US and Europe. In particular, it has become an important principle guiding the investment strategies of various funds and accounts.[17]

Government-controlled funds

Government-controlled funds such as pension funds are often very large players in the investment field, and are being pressured by the citizenry and by activist groups to adopt investment policies which encourage ethical corporate behavior, respect the rights of workers, consider environmental concerns, and avoid violations of human rights. One outstanding endorsement of such policies is The Government Pension Fund of Norway, which is mandated to avoid "investments which constitute an unacceptable risk that the Fund may contribute to unethical acts or omissions, such as violations of fundamental humanitarian principles, serious violations of human rights, gross corruption or severe environmental damages."[18]

Many pension funds are currently under pressure to disinvest from the arms company BAE Systems, partially due to a campaign run by the Campaign Against Arms Trade (CAAT).[19] Liverpool City Council has passed a successful resolution to disinvest from the company,[20] but a similar attempt by the Scottish Green Party in Edinburgh City Council was blocked by the Liberal Democrats.[21]

Mutual funds and ETFs

Socially responsible mutual funds counted by the 2014 Trends Report increased in number to 415 in 2014, up from 333 in 2012, 250 in 2010, 173 in 2005 & 2007, 189 in 2003, and 167 in 2001. The overall number of mutual funds incorporating environmental, social and corporate governance (ESG) has increased four-fold increase since 2012. Additionally, 20 exchange-traded funds (ETFs) that incorporate ESG criteria were identified with $3.5 billion in assets at the end of 2011, an increase from the 8 ETFs with $2.25 billion in net assets identified in its 2007 report—the first Trends report to track ETFs [11]. Unlike the Employee Retirement Income Security Act of 1974 (ERISA), which severely limits the extent to which socially responsible goals can be considered in managing corporate and Taft-Hartley pension assets (due to ERISA's overriding goal of protecting employees' pensions),[22] registered investment companies can take these factors into account so long as the disclosure and other requirements of the Investment Company Act of 1940 are met.[23] US SIF maintains charts describing the socially responsible mutual funds offered by its member firms.


Key: X = No investment; P = Positive investment; R = Restricted investment; NS = No screens.
Mutual Fund Alcohol Tobacco Gambling Defense/ Weapons Animal Testing Products/ Services Environment Human Rights Labor Relations Employment/ Equality Community Investment Proxy Voting
Access Capital Strategies Community Investment Fund[24]NSNSNSNSNSNSNSNSNSNSPX
AHA Balanced Fund - Instiutional ClassNSXNSNSNSNSNSNSNSNSNSV
AHA Diversified Equity Fund - Institutional ClassNSXNSNSNSNSNSNSNSNSNSV
AHA Diversified Equity Fund - N ClassNSXNSNSNSNSNSNSNSNSNSV
AHA Full Maturity Fixed Income Fund - Institutional ClassNSXNSNSNSNSNSNSNSNSNSV
AHA Full Maturity Fixed Income Fund - N ClassNSXNSNSNSNSNSNSNSNSNSV
AHA Limited Maturity Fixed Income Fund - Institutional ClassNSXNSNSNSNSNSNSNSNSNSV
AHA Limited Maturity Fixed Income Fund - N ClassNSXNSNSNSNSNSNSNSNSNSV
AHA Socially Responsible Equity IXXXXNSPPPPPNSV
AHA Socially Responsible Equity NXXXXNSPPPPPNSV
Appleseed FundRRRRNSNSPPPNSPV
Ariel Appreciation Fund NSXNSXNSNSNSNSNSNSNSV
Ariel Focus FundNSXNSXNSNSNSNSNSNSNSV
Ariel FundNSXNSXNSNSNSNSNSNSNSV
Azzad Ethical Income Fund XXXXNSNSNSNSNSNSNSV
Azzad Ethical Mid Cap FundXXXXNSNSNSNSNSNSNSV
Brighter Student Fund XXXXXXXXXPXX
Mutual Fund Alcohol Tobacco Gambling Defense/ Weapons Animal Testing Products/ Services Environment Human Rights Labor Relations Employment/ Equality Community Investment Proxy Voting
Calvert Aggressive Allocation Fund XXXRRPPPPPPV
Calvert Capital Accumulation A XXXRRPPPPPPV
Calvert Capital Accumulation B XXXRRPPPPPPV
Calvert Capital Accumulation C XXXRRPPPPPPV
Calvert Conservative Allocation Fund XXXRRPPPPPPV
Calvert Global Alternative Energy Fund A NSNSNSNSNSPPPPPNSV
Calvert Global Water Fund XNSNSXNSXNSPNSNSNSV
Calvert International Opportunities Fund RRNSNSNSPPPPPNSV
Calvert Large Cap Growth A XXXRRPPPPPPV
Calvert Large Cap Growth B XXXRRPPPPPPV
Calvert Large Cap Growth C XXXRRPPPPPPV
Calvert Large Cap Growth I XXXRRPPPPPPV
Calvert Mid Cap Value Fund XXXRRPPPPPPV
Calvert Moderate Allocation Fund XXXRRPPPPPPV
Calvert New Vision Small Cap A XXXRRPPPPPPV
Calvert New Vision Small Cap B XXXRRPPPPPPV
Calvert New Vision Small Cap C XXXRRPPPPPPV
Mutual Fund Alcohol Tobacco Gambling Defense/ Weapons Animal Testing Products/ Services Environment Human Rights Labor Relations Employment/ Equality Community Investment Proxy Voting
Calvert Small Cap Value Fund XXXRRPPPPPPV
Calvert Social Index A XXXRRPPPPPPV
Calvert Social Index B XXXRRPPPPPPV
Calvert Social Index C XXXRRPPPPPPV
Calvert Social Index I XXXRRPPPPPPV
Calvert Social Investment Balanced A XXXRRPPPPPPV
Calvert Social Investment Balanced C XXXRRPPPPPPV
Calvert Social Investment Bond A XXXRRPPPPPPV
Calvert Social Investment Enhanced Equity A XXXRRPPPPPPV
Calvert Social Investment Enhanced Equity B XXXRRPPPPPPV
Calvert Social Investment Enhanced Equity C XXXRRPPPPPPV
Calvert Social Investment Equity A XXXRRPPPPPPV
Calvert Social Investment Equity C XXXRRPPPPPPV
Calvert Social Investment Equity I XXXRRPPPPPPV
Calvert World Values International A XXNSRNSPPPPPPV
Calvert World Values International C XXNSRNSPPPPPPV
CRA Qualified Investment NSNSNSNSNSNSNSNSNSNSPX
Mutual Fund Alcohol Tobacco Gambling Defense/ Weapons Animal Testing Products/ Services Environment Human Rights Labor Relations Employment/ Equality Community Investment Proxy Voting
Domini European PacAsia Social Equity A XXXXNSPPPPPNSV
Domini European PacAsia Social Equity I XXXXPPPPPPNSV
Domini European Social Equity AXXXXNSPPPPPNSV
Domini European Social Equity IXXXXNSPPPPPNSV
Domini Institutional Social EquityXXXXNSPPPPPNSV
Domini PacAsia Social Equity A XXXXNSPPPPPNSV
Domini PacAsia Social Equity I XXXXNSPPPPPNSV
Domini Social Bond XXXXNSPPPPPPV
Domini Social Equity AXXXXNSPPPPPNSV
Domini Social Equity IXXXXNSPPPPPNSV
Epiphany Faith and Family Values 100 Fund - A Class RRRRNSNSPPPPNSV
Epiphany Faith and Family Values 100 Fund - C ClassRRRRNSNSPPPPNSV
Epiphany Faith and Family Values 100 Fund - N ClassRRRRNSNSPPPPNSV
Gabelli SRI Green Fund Inc A[25]RRRXNSPPNSNSNSNSV
Gabelli SRI Green Fund Inc AAA [25]RRRXNSPPNSNSNSNSV
Gabelli SRI Green Fund Inc CRRRXNSPPNSNSNSNSV
Gabelli SRI Green Fund Inc IRRRXNSPPNSNSNSNSV
Green Century Balanced NSXNSRRPPNSNSNSNSV
Green Century EquityXXXRNSPPPPPNSV
Integrity Growth and Income Fund XXXNSRNSPRRRNSV
Mutual Fund Alcohol Tobacco Gambling Defense/ Weapons Animal Testing Products/ Services Environment Human Rights Labor Relations Employment/ Equality Community Investment Proxy Voting
Legg Mason Prt Social Awareness Fund ANSRNSRNSNSPPPPNSV
Legg Mason Prt Social Awareness Fund BNSRNSRNSNSPPPPNSV
Legg Mason Prt Social Awareness Fund CNSRNSRNSNSPPPPNSV
MMA Praxis Core Stock Fund A XXXXRPPPPPPV
MMA Praxis Core Stock Fund BXXXXRPPPPPPV
MMA Praxis Growth Index Fund AXXXXRPPPPPPV
MMA Praxis Growth Index Fund BXXXXRPPPPPPV
MMA Praxis Intermediate Income AXXXXRPPPPPPV
MMA Praxis Intermediate Income BXXXXRPPPPPPV
MMA Praxis International AXXXXRPPPPPPV
MMA Praxis International BXXXXRPPPPPPV
MMA Praxis Small Cap Fund AXXXXRPPPPPPV
MMA Praxis Small Cap Fund BXXXXRPPPPPPV
MMA Praxis Value Index AXXXXRPPPPPPV
MMA Praxis Value Index BXXXXRPPPPPPV
Neuberger Berman Socially Resp Inv XXXXRPPPPPNSV
New Alternatives Fund XXXXXPPPPPPX
Mutual Fund Alcohol Tobacco Gambling Defense/ Weapons Animal Testing Products/ Services Environment Human Rights Labor Relations Employment/ Equality Community Investment Proxy Voting
Parnassus Core Equity Fund XXXXRPPPPPNSV
Parnassus Fund XXXXRPXPPPPV
Parnassus Income Fixed Income XXXXRPXPPPNSV
Parnassus Mid Cap Fund XXXXRPPPPPPV
Parnassus Small Cap FundXXXXRPXPPPPV
Parnassus Endeavor FundXXXXRPXPPPPV
Pax World BalancedRXRRRPPPPPPV
Pax World GrowthRXRRRPPPPPNSV
Pax World High YieldRXRRRPPPPPPV
Pax World Value Fund - Individual InvestorNSXRXRPPPPPNSV
Pax World Value Fund - Institutional ClassNSXRXRPPPPPNSV
Pax World Women's Equity Fund - Individual InvestorNSXRXRRRNSRRNSV
Pax World Women's Equity Fund - Institutional ClassNSXRXRRRRRRNSV
Portfolio 21 NSXRRRPPRRRPV
Portfolio 21 Institutional NSXRRRPPRRRNSV
Sentinel Sustainable Core Opportunities Fund XXXRRPPPPPNSV
Sentinel Sustainable Emerging Companies FundXXXRRPPPPPNSV
TIAA-CREFRRRRNSPPPPPNSV
Flex Total Return Utilities Fund XXXXXPPNSPPNSV
Vanguard FTSE Social Index Fund
Walden Social Balanced FundXXRXRPPPPPPV
Walden Social Equity FundXXRXRPPPRPXV
Winslow Green Growth Fund RRRRRPPNSNSNSNSV
xRussell 3000[26]NSNSNSNSNSNSNSNSNSNSNSX

Separately managed accounts

According to the 2014 Report on US Sustainable, Responsible and Impact Investing Trends, among separate account managers, 214 distinctive separate account vehicles or strategies, with $433 billion in assets, incorporated ESG factors into investment analysis. Where a separate account is subject to ERISA, there are legal limitations on the extent to which investment decisions can be based on factors other than maximizing plan participants' economic returns.[22]

Shareholder advocacy

Shareholder resolutions are filed by a wide variety of institutional investors, including public pension funds, faith-based investors, socially responsible mutual funds, and labor unions. In 2004, faith-based organizations filed 129 resolutions, while socially responsible funds filed 56 resolutions.[27]

Regulations governing shareholder resolutions vary from country to country. In the United States, they are determined primarily by the Securities and Exchange Commission, which regulates mutual funds and applies the 1940 Act[28] and by the Department of Labor, which regulates certain plans and applies ERISA.[29]

These regulatory regimes require pension plans and mutual funds to disclose how they voted on behalf of their investors.[30] U.S. shareholders have organized various groups to facilitate jointly filing resolutions. These include the Council of Institutional Investors, the Interfaith Center on Corporate Responsibility, and the US SIF.

From 2012 to 2014, more than 200 US institutions and investment management firms filed or co-filed proposals. These institutions and money managers collectively controlled $1.72 trillion in assets at the end of 2013. The top categories of environmental and social issues from 2012 to 2014 were political contributions and climate change and environmental issues.[31]

Community investing

Community investing, a subset of socially responsible investing, allows for investment directly into community-based organizations. Community investing institutions use investor capital to finance or guarantee loans to individuals and organizations that have historically been denied access to capital by traditional financial institutions. These loans are used for housing, small business creation, and education or personal development in the US, or are made available to local financial institutions abroad to finance international community development. The community investing institution typically provides training and other types of support and expertise to ensure the success of the loan and its returns for investors.[32]

Community investing grew almost 5% from 2012 to 2014. Assets held and invested locally by community development financial institutions (CDFIs) based in the US totaled $64.3 billion at the start of 2014, up from $61.4 billion in 2012.

Investing strategies

Investing in capital markets

Social investors use several strategies to maximize financial return and attempt to maximize social good. These strategies may satisfy the ethical principle of non-harming, but with the exception of shareholder activism/engagement, they do not necessarily create positive social impact.

Negative screening

Negative screening excludes certain securities from investment consideration based on social and/or environmental criteria. For example, many socially responsible investors screen out tobacco company investments.

The longest-running SRI index, the Domini 400—now the MSCI KLD 400—was started in May 1990. It has continued to perform competitively —with average annualized total returns of 9.51% through December 2009 compared with 8.66% for the S&P 500.[33]

Despite this impressive growth, it has long been commonly perceived that SRI brings smaller returns than unrestricted investing. So-called "sin stocks", including purveyors of tobacco, alcohol, gambling and defense contractors, were banned from portfolios on moral or ethical grounds. And shutting out entire industries hurts performance, the critics said.[34] However, in a comprehensive study, financial economists Lobe, Roithmeier, and Walkshäusl taking the position of the advocatus diaboli, answer the question whether to invest in a socially responsible way – or not? They create a set of global and domestic sin indexes consisting of 755 publicly traded socially irresponsible stocks around the world belonging to the Sextet of Sin: adult entertainment, alcohol, gambling, nuclear power, tobacco, and weapons. They compare their stock market performance directly with a set of virtue comparables consisting of the most important international socially responsible investment indexes. They find no compelling evidence that ethical and unethical screens lead to a significant difference in their financial performance, which is in contrast with the results of prior studies on sinful investing.[35]

Divestment

Divesting is the act of removing stocks from a portfolio based on mainly ethical, non-financial objections to certain business activities of a corporation. Recently, CalSTRS (California State Teachers' Retirement System) announced the removal of more than $237 million in tobacco holdings from its investment portfolio after 6 months of financial analysis and deliberations.

Shareholder activism

Shareholder activism efforts attempt to positively influence corporate behavior. These efforts include initiating conversations with corporate management on issues of concern, and submitting and voting proxy resolutions. These activities are undertaken with the belief that social investors, working cooperatively, can steer management on a course that will improve financial performance over time and enhance the well being of the stockholders, customers, employees, vendors, and communities. Recent movements have also been reported of "investor relations activism", in which investor relations firms assist groups of shareholder activists in an organized push for change within a corporation; this is done typically by leveraging their enhanced knowledge of the corporation, its management (often via direct relationships), and the securities laws as a whole.[36] Hedge funds are also major activist investors; while some pursue socially responsible investing goals, many simply are seeking to maximize fund returns.[37] Pension plans subject to ERISA are somewhat more constrained in their ability to engage in shareholder activism or the use of plan assets to promote public policy positions; any expenditure of plan assets must be aimed at enhancing participants' retirement income.[38]

Shareholder engagement

A less vocal subtype of shareholder activism, shareholder engagement requires extensive monitoring of the non-financial performance of all portfolio companies. In shareholder engagement dialogues, investees receive constructive feedback on how to improve ESG issues within their sphere of influence.[39]

Positive investing

Positive investing is the new generation of socially responsible investing.[34] It involves making investments in activities and companies believed to have a positive social impact. Positive investing suggested a broad revamping of the industry's methodology for driving change through investments.[40][41] This investment approach allows investors to positively express their values on corporate behavior issues such as social justice and the environment through stock selection --- without sacrificing portfolio diversification or long-term performance.[42] Positive screening pushes the idea of sustainability, not just in the narrow environmental or humanitarian sense, but also in the sense of a company's long-term potential to compete and succeed.[34] In 2015, Morgan Stanley conducted a review of 10,000 funds and concluded "strong sustainability" investments outperformed weak sustainability investments,[43] tackling the idea of a trade-off between positive impact and financial return.[44] while the Global Impact Investing Network's 2015 report on benchmarks and returns in impact investing in private equity and venture capital found market-rate or market-beating returns were common in impact investments.[45]

Impact investing

Impact Investing is the alternative investment (ie private equity) approach to Positive investing. In 2014, the UK's presidency of the G8 created a Social Impact Investment Task Force which produced a series of reports that defined impact investing as "those that intentionally target specific social objectives along with a financial return and measure the achievement of both."[46] Impact investing, capitalizes businesses that potentially provide social or environmental impact at a scale that purely philanthropic interventions usually cannot reach.[47] This capital may be in a range of forms including private equity, debt, working capital lines of credit, and loan guarantees. Examples in recent decades include many investments in microfinance, community development finance, and clean technology. Impacting investing has its roots in the venture capital community, and an investor will often take active role mentoring or leading the growth of the company or start-up.

Community investment

By investing directly in an institution, rather than purchasing stock, an investor is able to create a greater social impact: Money spent purchasing stock accrues to the stock's previous owner and may not generate social good, while money invested in a community institution is put to work. For example, money invested in a Community Development Financial Institution may be used by that institution to alleviate poverty or inequality, spread access to capital to under-served communities, support economic development or green business, or create other social good. In 1984, Trillium Asset Management's founder, Joan Bavaria, invited Chuck Matthei of the Institute for Community Economics (ICE), an organization that helps communities create and sustain land trusts, to a meeting of US SIF. It is likely that this was the first time a nonprofit organization with a loan fund would meet directly with SRI managers. Trillium clients began investing in ICE later that year.

Global context

Socially responsible investing is a global phenomenon. With the international scope of business itself, social investors frequently invest in companies with international operations. As international investment products and opportunities have expanded, so have international SRI products. The ranks of social investors are growing throughout developed and developing countries. In 2006, the United Nations Environment Programme launched its Principles for Responsible Investment which provide a framework for investors to incorporate environmental, social, and governance (ESG) factors into the investment process. PRI has more than 1,500 signatories managing more than US$60 trillion of assets.[48]

Ethical investment in the UK

In 1985, Friends Provident launched the first ethically screened investment fund with criteria which excluded tobacco, arms, alcohol and oppressive regimes.[49] Since 1985, over 90 investment funds have launched offering a wide range of investment criteria; both negatively screened and with positive investment criteria i.e. investing into companies involved in promoting sustainability.

Since 1985, most of the major investment organizations have launched ethical and socially responsible funds, although this has led to a great deal of discussion and debate over the use of the term "ethical" investment.[50] This is because each of the fund management organizations tend to apply a slightly different approach to running their funds.

In recent years there has been growth in the market for high social impact investments; this is a style of investing where the businesses receiving investment have social or environmental goals as a primary purpose.

UK institutions are also getting more involved in social investing through impact investing funds, with those such as Deutsche Bank and NESTA, alongside other institutions such as Big Issue Invest, which is part of The Big Issue group.

As of June 2014, EIRIS estimated that there was over £13.5 billion invested in Britain’s green and ethical retail funds. This estimate is based on around 85 UK domiciled green or ethical retail funds and it seeks to not include UK money invested in ethical funds domiciled outside of the UK.[51]

In higher education

In 2007, the Dwight Hall organization at Yale University launched the first undergraduate-run socially responsible investment fund in the United States, known as the Dwight Hall Socially Responsible Investment Fund.[52][53]

See also

References

  1. ↑ C. Logue, Ann. Socially Responsible Investing For Dummies. Wiley.com. p. 196.
  2. ↑ Lemke and Lins, Regulation of Investment Advisers §2:158 (Thomson West, 2014)
  3. ↑ Sullivan, Paul With Impact Investing, a Focus on More Than Returns, April 23, 2010
  4. ↑ Bradley, Theresa Finally, socially responsible investors can measure their impact, September 24, 2011
  5. ↑ Domini, Amy (14 March 2011). "Want to Make a Difference? Invest Responsibly". The Huffington Post. Retrieved 26 November 2011.
  6. ↑ "The Evolution of Socially Responsible Investing". Retrieved 30 October 2006.
  7. ↑ "The Investment FAQ — Strategy — Socially Responsible Investing". Retrieved 30 Oct 2006.
  8. ↑ Students for Bhopal Student Power Crushes Dow Archived May 14, 2007, at the Wayback Machine.
  9. ↑ Gray, Hillel. New Directions in the Investment and Control of Pension Funds. DC: Investor Responsibility Research Center, 1983. p.36-37
  10. ↑ Gray 1983, p.34
  11. ↑ Richardson, Benjamin J., Socially Responsible Investment Law: Regulating the Unseen Polluters (Oxford University Press, 2008).
  12. ↑ "Coalition for Environmentally Responsible Economies". Ceres. 2013-06-25. Retrieved 2013-07-25.
  13. ↑ "The premier industry conference for socially responsible investing in the United States of America". SRI in the Rockies. Retrieved 2013-07-25.
  14. ↑ "Sudan Divestment Task Force - Home". Sudandivestment.org. Retrieved 2013-07-25.
  15. ↑ Jackson, Kevin T., Building Reputational Capital: Strategies for Integrity and Fair Play That Improve the Bottom Line (Oxford University Press, 2004).
  16. ↑ Sullivan, Paul (August 14, 2015). "With an Eye to Impact, Investing Through a 'Gender Lens'". The New York Times. The New York Times. Retrieved May 18, 2016.
  17. ↑ Lemke and Lins, Regulation of Investment Advisers §2:158 (Thomson West, 2014).
  18. ↑ "Ethical Guidelines for the Government Pension Fund — Global". Archived from the original on 3 September 2007. Retrieved 19 September 2007.
  19. ↑ "CAAT Campaigns - Clean Investment launch 2007". Caat.org.uk. Retrieved 2013-07-25.
  20. ↑ EthicalInvestmentedinburgh (2007-11-09). "Ethical Investment Blog: Liverpool Council Disinvests from BAE". Ethicalinvestmentedinburgh.blogspot.com. Retrieved 2013-07-25.
  21. ↑ Greens, Edinburgh. "Edinburgh and Midlothian Greens » Blog Archive » Greens continue fight for ethical pensions – Lib Dem councillors under fire for ignoring party policy". Edinburghgreens.org.uk. Retrieved 2013-07-25.
  22. 1 2 Lemke and Lins, ERISA for Money Managers §§2:122 - 2:124 (Thomson West, 2014).
  23. ↑ Lemke, Lins and Smith, Regulation of Investment Companies §5.02[2] (Matthew Bender, 2014).
  24. ↑ https://web.archive.org/web/20090106141214/http://www.voyageur.net/AccessCapital. Archived from the original on January 6, 2009. Retrieved July 1, 2009. Missing or empty |title= (help)
  25. 1 2 https://web.archive.org/web/20090615193928/http://gabelli.com/funds/products/1794.html. Archived from the original on June 15, 2009. Retrieved July 1, 2009. Missing or empty |title= (help)
  26. ↑ http://ussif.org/resources/mfpc/mfprofiles.cfm?mf_mfid=67&mf_millid=0000999999&mf_fund_name=xRussell%203000
  27. ↑ "Interfaith Center on Corporate Responsibility". Iccr.org. 2004-02-03. Retrieved 2013-07-25.
  28. ↑ Lemke, Lins and Smith, Regulation of Investment Companies (Matthew Bender, 2014)
  29. ↑ Lemke and Lins, ERISA for Money Managers (Thomson West, 2014).
  30. ↑ (PDF) https://web.archive.org/web/20070614064750/http://www.iccr.org/news/press_releases/pdf%20files/AeN_February%202007.pdf. Archived from the original (PDF) on June 14, 2007. Retrieved May 15, 2007. Missing or empty |title= (help)
  31. ↑ http://www.ussif.org/Files/Publications/SIF_Trends_14.F.ES.pdf
  32. ↑ "US SIF: The Forum for Sustainable and Responsible Investment: Community Investing". Ussif.org. Retrieved 2014-04-01.
  33. ↑ "Socially Responsible Investing Top 10 Frequently Asked Questions and Answers" (PDF). Ussif.org. Retrieved 2013-07-25.
  34. 1 2 3 Wine, Elisabeth (1 August 2009). "SRI Plows the Path to Profitability". On Wall Street.
  35. ↑ Lobe, Sebastian, Roithmeier, Stefan and Walkshäusl, Christian (7 August 2009). "Vice vs. Virtue Investing Around the World". Ssrn.com. Retrieved 2013-07-25.
  36. ↑ Carther, Shauna (18 September 2009). "Socially Responsible Mutual Funds". Investopedia.com. Retrieved 2013-07-25.
  37. ↑ Lemke, Lins, Hoenig and Rube, Hedge Funds and Other Private Funds §6:43 (Thomson West, 2014).
  38. ↑ Lemke and Lins, ERISA for Money Managers §§2:94 - 2:96 (Thomson West, 2014).
  39. ↑ One of the SRI labels of French research centre Novethic is for engagement funds, like the funds initiated by Fondation Guilé.
  40. ↑ Lewis, Geoff (1 June 2005). "Advocacy Investing – Catnip for Wealthy Clients?". Overland Park: Registered Rep. Retrieved 12 May 2005.
  41. ↑ Bragga, Rick (1 September 2005). "Finance by the Book". Advancing Philanthropy. Retrieved 12 May 2005.
  42. ↑ Wells, Angela (July 2004). "New Financial Study Shows Stocks Can Reflect Investor Values without Sacrificing Performance". Sunnyvale: Yahoo Finance. Retrieved 12 May 2005.
  43. ↑ Morgan Stanley. "Sustainable Investing Performance?". Retrieved 14 July 2015.
  44. ↑ "Does Social Impact Demand Financial Sacrifice?". Wharton. Retrieved 14 July 2015.
  45. ↑ "Introducing the Impact Investing Benchmark" (PDF). GIIN. Retrieved 12 August 2015.
  46. ↑ G8 Social Impact Investment Task Force, Investing for Social and Environmental Impact, January 2009.
  47. ↑ Monitor Institute, Impact Investment, the Invisible Heart of Markets, September 2014.
  48. ↑ "PRI AR 2016 | PRI at 10". annualreport.unpri.org. Retrieved 2016-08-06.
  49. ↑ "Ethical Investment: What it is and how it works (or doesn't)". Corporate Watch Magazine. Corporate Watch Magazine. Retrieved 11 June 2015.
  50. ↑ Denham, Annabel. "Ethical investment can be a risky business". City AM. Retrieved 12 August 2015.
  51. ↑ EIRIS | Key facts & statistics http://www.eiris.org/news/statistics.html
  52. ↑ • Jerilyn Klein Bier (2010-12-01). "College Students Drive SRI Efforts". Fa-mag.com. Retrieved 2013-07-25.
  53. ↑ "First Investment of Dwight Hall at Yale SRI Fund (press release)". Csrwire.com. 2010-03-08. Retrieved 2013-07-25.
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