| The Growth of Socially Responsible Investing
From the mid-1990s, and especially from 2000 onwards, the socially responsible investment market began growing rapidly. Positive screening for socially responsible investment opportunities became increasingly common in many countries, facilitated by the development of social indexes. Investors and mutual fund managers began to actively seek out companies with a good social, environmental or employment policy record.
It has only been over the last few years that this form of investment has moved centre-stage, into the mainstream investment market. This is largely due to the growing awareness that socially responsible corporate behaviour is not only good for people and the environment, but makes good financial and commercial sense. Nowadays, socially responsible investments are being offered by major financial institutions, both in Canada and worldwide.
A key driver in the growth of socially responsible investments has been consumer demand. Research conducted among the Canadian population by Vector Research found that 72% of Canadians surveyed thought that businesses should pursue social responsibilities as well as profits, and 51% of respondents said they would choose a pension plan that invested in socially responsible companies, even if the financial benefits to themselves were a little lower (Canadian Democracy & Corporate Accountability Commission, 2002). In a separate study, more than half of the respondents in a survey of Canadians reported being interested in investing in ethical mutual funds (The Ideation Group, 1999). In the UK, a MORI study conducted for Friends Provident in June 2004 found that around two thirds of investors are interested in having their money invested in a socially responsible way.
Another important factor in the growth of this market has been the increasing requirement for pension funds to declare their SRI interests and screening criteria. The UK has been a leader in this area, introducing legislation in 2000 which required funds to disclose to investors what extent their investment strategies incorporate SRI criteria. Around 60% of all UK occupational pension funds, accounting for around four-fifths of all pension fund assets, now reportedly include SRI criteria in their investment planning. In the USA, although legislation has not been introduced in this area, there has been a rapid increase in the numbers of SRI options available in
Size of market
By 2004 it was reported that there were approximately $65.5 billion in socially responsible investment assets in Canada. In the US, more than 1 out of every 9 dollars under professional management was reported to be in socially responsible forms of investment in 2003. There were $2.14 trillion in the US in socially screened portfolios at this time, of which $1.99 trillion were in individual or institutional accounts and $151 billion in mutual funds. In Europe, research conducted in 2003 study calculated institutional socially responsible investing alone to be around €336 billion (Eurosif, 2003).
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The Growth of Socially Responsible Investing
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