One in nine US professionally invested dollars now in SRI

One in every nine investment dollars run by fund managers or institutional investors in the US is now run following socially responsible principles, either portfolio screening, shareholder advocacy or community investing, according to the bi-annual review of the market by the US Social Investment Forum (SIF). The SIF said new growth areas included SRI ETFs and private equity and hedge funds based on social and environmental criteria, as well as significant jumps in SRI mutual fund and community investing.
In its 2007, Report on Socially Responsible Investing Trends in the United States, the SIF said 11%, or $2.71 trillion of the $25.1 trillion in total assets under management tracked in Nelson Information’s Directory of Investment Managers, was now in SRI strategies. In the 2005 trends survey, the SRI figure was $2.29 trillion. Over two years, SRI assets in the US market have increased more than 18%, while total institutional assets under management have grown by less than three percent. The review said that at $1.9 trillion, socially screened segregated accounts for institutional investors and high net worth individual clients remain the bulk of SRI assets tracked in the US in 2007. The figure rose by 28% from $1.5 trillion in 2005. Investment in all socially and environmentally screened funds – including mutual funds and exchange traded funds (ETFs) – was up by 13% to reach $201.8bn in 260 funds in 2007 from $179bn in 201 funds in 2005. The report said that eight socially and environmentally screened ETFs ran $2.25bnin total net assets by the end of 2006, the first time SRI-focused ETFs had been recorded by the SIF, in what is expected to be a growing SRI vehicle. Assets in community investment jumped by almost 32% from $19.6bn in 2005 to $25.8bn in 2007.
The alternatives sector is also growing fast with the SIF estimating levels of assets in private equity and hedge funds that use social and environmental screening at $5.3bn. The rise in SRI assets also appears to have boosted shareholder activism on company resolutions over social and environmental issues to record levels. The SIF said the average level of support for such resolutions increased by 57% percent from 9.8% in 2005 to 15.4 percent in 2007. Cheryl Smith, chair of the Social Investment Forum Board and executive vice president and senior portfolio manager at Trillium Asset Management Corporation, said: “Thanks to growing institutional investor demand and a wide range of issues that are driving stronger retail investor interest, socially responsible investing is thriving today as never before. Increasingly, money managers are incorporating social and environmental factors into their investing practices, acknowledging the demand for social investing products and services from institutional and individual investors, socially concerned high-net-worth clients, individuals seeking SRI options in their retirement and college-savings plans, and ‘mission-driven’ institutions including foundations, endowments, labour unions, and faith-based investors.”