Socially Responsible Investment (SRI) - Is There More to Gain or Lose?

This article explores the trend toward Socially Responsible Investment (SRI). This trend has grown from human-made environmental disasters. Among the worst imaginable are the 2010 Deepwater Horizon oil spill and the 2015 Rio Doce contamination in Brazil. Disasters like these have raised public consciousness about Corporate Social Responsibility (CSR) worldwide. Consequently, different kinds of stakeholders are increasingly demanding institutional investors to align financial goals with common non-financial values. Among institutional investors, especially pension funds and insurers have hundreds of billions of assets under management (AUM). These large amounts point to their exceptional importance in terms of promoting CSR. Furthermore, a pension fund’s or insurer’s natural long-term investment perspective makes it even more reasonable to consider environmental, social, and governance (ESG) issues in investment decisions. The trend toward socially and environmentally responsible investment is here referred to as a “process of adaptation.”