Socially Responsible Investing - The Upward Trend
16 October 2002 at 1:10 pm
The latest Socially Responsible Investing Benchmark report shows that SRI continued to grow dramatically over the past twelve months – rising to at least $13.9 billion from $10.5 billion only a year ago.
The details of the report were released last week at the annual conference of the Ethical Investment Association held in Sydney.
The results represent an increase of 32% since the EIA’s baseline study was conducted in 2001 and is in sharp contrast to conventional equity funds which are experiencing poor performance and outflows.
Ethical Investment Association committee member, Simeon Michaels says the growth also makes SRI the second fastest growing form of investment over the year, second only to property.
He told the conference that SRI is being seen as a prudent investment strategy and that is why growth in SRI Managed funds is twelve times the industry average.
Michaels says unlike property which is enjoying popularity due to cyclical performance, SRI in Australia is just at the beginning of its growth curve. This is illustrated by the fact that SRI captures 1 dollar in 8 in the US.
Michaels says the growth of SRI creates challenges for corporations. It is now vital for corporates to understand Socially Responsible Investment and how it will impact on its reputation, shareholder value and access to capital.
According to a joint SocialFunds.com and Motley Fool investor survey in the US, corporate responsibility, accountability and ethics issues concern more than 90% of those companies that took part.
Participants were asked if they were evaluating how to protect their organisation from accounting and executive scandals. The results show
that almost 70% were assessing how to protect themselves.
More than half (52.7%) said the main evaluation method was assessing the company’s social, environmental and corporate governance records.
However, on the question of who a company is accountable to, community rated fourth (70.9%) after shareholders (86.5%), employees (79.2%) and customers (76.07%).
You can check out more information about the Ethical Investment Association’s annual conference at its web site at www.eia.org.au.