The pool of assets devoted to socially responsible investing (SRI) and sustainable investing has come a long way from its origins in the late 1960s and early 1970s, when it was considered a niche market that would be unlikely to attract a wide following. Instead it now grows at a faster rate than the broader universe of investments, according to a new report from the Social Investment Forum.
The Forum’s 2010 report, the 2010 Report on Socially Responsible Investing Trends in the United States, released Tuesday, says that the money devoted to SRI in the U.S. amounts to more than $3 trillion, with almost $1 out of every $8 under professional management. Not only that, SRI assets grew during the economic downturn by a rate of 13%, from $2.71 trillion to $3.07 trillion, while overall assets just increased by 1%. This growth is due to such factors, says the report, as net inflows into existing SRI products, new SRI product development, and the adoption of SRI strategies by managers and institutions that had not previously used them.
Since 2005 SRI assets grew by more than 34%, with the most recent Trends report identifying $2.71 trillion in total assets under management using one or more of the three SRI strategies: screening (the consideration of environmental, social, and governance [ESG] factors), shareholder advocacy (including the filing of shareholder resolutions) and community investing.
In a conference call held by the Social Investment Forum on Tuesday, speakers Lisa Woll, CEO of the Social Investment Forum; Cheryl Smith, Ph.D., CFA, Social Investment Forum board chair, president and senior portfolio manager at Trillium Asset Management Corp.; Meg Voorhes, Social Investment Forum deputy director and research director; and Trends report lead author Joshua Humphreys, Ph.D., a lecturer at Harvard University and the director of the Center for Social Philanthropy, discussed the report and its broader implications.
In a statement, Woll said, “Socially responsible and sustainable investing emerged from the recent financial crisis doing better than the overall market in terms of holding onto assets and attracting new investments. What is significant about this strong growth is that it encompasses both retail investors, including SRI mutual funds, and institutional investors, who hold the majority of SRI investments. We have also seen robust expansion of the strategies of shareholder advocacy and