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

Wednesday, August 2, 2017

Once a financial backwater, socially responsible investing is now a virtual tidal wave. Over the four-year period that ended in 2016, the amount invested in the U.S. using professional management that considers environmental, social and corporate-governance issues–ESG, for short–grew from $1.4 trillion to $8.1 trillion. About one-fifth of all assets under management in the U.S. now include some ESG component, according to the Forum for Sustainable and Responsible Investment, and some 500 mutual and exchange-traded funds now practice some form of socially conscious investing.

Calvert Research and Management, which got started in SRI in 1976 with a portfolio that avoided companies that were doing business in apartheid-era South Africa, now has 26 funds, including such specialty products as Calvert Global Water A. Pax World was cofounded in 1971 by a United Methodist official to “allow churches to invest their money in harmony with their message” and now has 11 funds. Among them is Pax Ellevate Global Women’s Index, which gives greater weighting in its portfolio to companies with high female representation on corporate boards and in management. One of the largest ESG-oriented ETFs is iShares MSCI ACWI Low Carbon Target ETF, which invests in companies all over the world with low carbon emissions.