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Socially responsible investing
(SRI) in the United States remained robust during 2001 and 2002,
even as the rest of the investment world was stagnant, according
to the Social Investment Forum’s (SFI) 2003 Report on Social
Responsible Investing Trends in the United States. The report notes
that assets in socially screened portfolios climbed to $2.15 trillion
in 2003, an increase over the $2.01 trillion counted in 2001. Screened
portfolios grew seven percent from 2001, while the broader universe
of all professionally managed portfolios fell four percent during
the same period.
The three core strategies of SRI are screening, shareholder advocacy
and community investing. Screened portfolios, with $2.15 trillion
in assets, represent the largest amount of assets in SRI. Community
investing and shareholder advocacy contribute additional assets,
resulting in a total of $2.18 trillion in professionally managed
assets for all SRI.
“This is encouraging evidence that the increasingly popular
strategies of screening, shareholder advocacy and community investing
are working together to sustain and deepen the appeal of socially
responsible investing,” noted SIF president Tim Smith. “We
are seeing the maturing of socially responsible investing from a
smaller handful of issues and approaches to a broad universe of
topics and tactics. SRI exerts an increasingly strong tug on the
mind of informed investors.”
According to Calvert senior vice president and chief marketing officer
Reggie Stanley, “Several factors explain why socially responsible
investing expanded during the last two years even as the overall
financial world contracted. Part of that story is the strong performance
of socially responsible investments. Another key element is the
fact that social investors are loyal; they truly are in it for the
long haul. Not only do social investors see compelling financial
returns, they also have confidence that they are encouraging greater
corporate responsibility. They increasingly see the tie between
corporate integrity, reduced risk and better long-term sustainability.”
Key Trends
Among the highlights of the 2003 Report are the following findings:
* Mutual funds. Socially responsible mutual funds counted
by the trends report increased in number to 200 in 2003. Assets
in socially screened mutual funds identified by the trends report
grew by 19 percent, to $162 billion, up from $136 billion in 2001.
More than half (51 percent) of this growth is attributed to both
newly identified and newly-created funds, and 49 percent represents
growth in existing assets. In terms of attracting investor assets,
socially screened mutual funds grew on a net basis in 2002 while
the rest of the mutual fund industry contracted. According to Lipper,
socially responsible mutual funds saw net inflows of $1.5 billion
during 2002. Over the same time, U.S. diversified equity funds posted
outflows of nearly $10.5 billion.
* Separately managed accounts. Of the $2.15 trillion in socially
screened portfolios, $1.99 trillion are found in separate accounts
(portfolios privately managed for individuals and institutions)
with the remaining $162 billion residing in mutual funds. Assets
in socially screened separate accounts grew by seven percent since
the 2001 report. Screened private portfolios climbed to $1.99 trillion
in 2003, as compared with $1.87 trillion in 2001, $1.34 trillion
in 1999, and just $433 billion in 1997.
* Shareholder advocacy. Between 2001 and 2003, shareholder advocacy
activity increased by 15 percent, growing from 269 social and crossover
resolutions (which combined aspects of both “social” and
traditional corporate governance issues) filed in 2001 to 310 in
2003. Likewise the average percentage of votes received on these
resolutions increased from 8.7 percent in 2001 to 11.4 percent in
2003. Of the total $2.15 trillion in all socially screened portfolios,
$441 billion are in portfolios controlled by investors who are also
involved in shareholder advocacy on various social issues.
* Community investing. Community investing climbed 84 percent
between 2001 and 2003. Assets held and invested locally by community
development financial institutions (CDFIs) based in the United States
totaled $14 billion in 2003, up from $7.6 billion in 2001.
“Community investing has emerged in recent years as one of
the fastest-growing and most interesting aspects of the constantly
evolving story of socially responsible investing,” said Jean
Pogge, senior vice president of mission-based products of Shorebank.
“Today, community investing is an important alternative for
socially responsible investors with a ‘hands-on’ philosophy
to how their money is put to work in the world. For investors who
want to be able to trace their dollars directly into specific child
care, small business, job and non-profit programs, community investing
is definitely the way to go.”
For a full copy of the 2003 Trends Report, visit: www.socialinvest.org/areas/research/
trends/sri_trends_report_2003.pdf.
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