Socially Responsible Investing Surges Following Financial Crisis

Socially Responsible Investing has moved from a fringe movement in the 1980’s to the mainstream. Thanks to the financial crisis and heighten concerns over environmental  sustainability, SRI is now the fastest growing investment strategy in the U.S. and Europe.

For many investors the past few years have hammered home the importance of corporate integrity and environmental responsibility. Corporate scandals have lead to the collapse of Wall Street darlings like Lehman Brothers and Bear Stearns, while the biggest oil spill in U.S. history has wiped out billions of dollars in investor value at BP.

Before the crisis began, studies showed a majority of investors already believed companies that operate with higher levels of social responsibility carry less risk (55%) and deliver better returns (52%). The vast number of investors (71%) also contended that knowing a company is rated higher in terms of their social performance would make them more likely to invest in such companies. Yet few managers were willing to incorporate social risks as part of their investment strategy.

Behavior in the investment field is often hard to change, even when there is recognition that treating all stakeholders well is a competitive advantage, not a weakness. The tide, however, is turning. Today, more and more individual and institutional investors are demanding their management professionals implement more sustainable and socially responsible investing strategies. Otherwise they are taking their money somewhere else.

For more insights read Big Money Backs Social Responsibility’s Rise

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