NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, May 30, 2017

Socially responsible investing (SRI) has captured nearly a quarter of U.S.-based assets. New evidence from one of the world’s largest sovereign wealth funds shows that those investors are sacrificing significant performance. Indeed, those clients are giving up more than 1% a year – effectively doubling the typical 1% AUM advisory fee.

Socially responsible investing (SRI) has been referred to as “double-bottom-line” investing: investors seek profitable investments that meet their personal standards. For instance, some investors don’t want their money to support companies that sell tobacco products, alcoholic beverages, weapons or rely on animal testing in research and development. Other investors may also be concerned about environmental, social, governance (ESG) or religious issues. SRI and the broader category of ESG encompass many personal beliefs and don’t reflect just one set of values.