Blog : Socially Responsible Investing reaches new asset high

By Sam Lane | Jun 16, 2015 | in

By Michael McCord

The popularity of Socially Responsible Investing (SRI) for investors who want to express their progressive values has reached a new high.

According to the most recent trends report by The Forum on Sustainable & Responsible Investment (US SIF), the total of U.S. assets under management using SRI strategies dramatically increased by 76 percent from the period of 2012 to 2014. Overall, those SRI-strategy assets rose from $3.74 trillion at the beginning of 2012 to $6.57 trillion at the start of 2014.

The explosive growth of SRI-targeted investing does not surprise Mike Smith, the Newmarket-based representative for the Progressive Asset Management Group (PAM Group).

“We’ve been watching this trend for a while and this comprehensive report really puts it into perspective,” Smith said.

Since US SIF began tracking SRI trends in 1995 – the recent report is its 10th edition – SRI assets have grown 929 percent, or an annual growth rate of 13.1 percent.

“The assets engaged in sustainable, responsible and impact investing practices at the start of 2014 represent nearly 18 percent of the $36.8 trillion in total assets under management tracked by Cerulli Associates, ” the report stated. “These assets now account for more than one of our every six dollars under professional management. The individuals, institutions, investment companies, money managers and financial institutions that practice SRI seek to achieve long-term competitive financial returns together with positive societal impact.”

Smith said one of the telling facts of the research is the increase in large money managers and institutional investors who have taken up larger SRI holdings. A lot of money managers are offering fossil fuel-free portfolios and more in

vestors are demanding divestment from gun and weapons manufacturers. These were investing trends unimaginable even a few years ago.

“It’s an example of one more wave of people waking up to the idea and value of SRI,” Smith explained. “Big money managers have really started to move into the SRI space. More portfolios for big institutional investors and individuals are being managed with an SRI focus.”

Progressive Asset Management Group (PAM) out of Newmarket NH is an investment firm itself committed to socially responsible business, offering diverse investment options all with some aspect of social or environmental concern. The PAM Group’s Newmarket operation is green-certified with the Green Alliance, a Portsmouth-based organization representing more than 100 local green businesses, along with nearly 4,000 consumer members.

Smith said US SIF report shows that SRI strategies are being applied across asset classes to promote investor values and enhance stronger corporate social responsibility. The trigger effect also builds long-term value for companies and their stakeholders while fostering new businesses committed to community and environmental benefits.

Through information requests and research undertaken in 2014, the US SIF Foundation identified:

• $6.20 trillion in US assets at the beginning of 2014 held by 480 institutional investors, 308 money managers and 880 community investment institutions that apply various environmental, social and governance (ESG) criteria in their investment analysis and portfolio selection.
• $1.72 trillion in US assets at the beginning of 2014 held by 202 institutional investors or money managers that filed or co-filed shareholder resolutions on ESG issues at publicly traded companies from 2012 through 2014.

The report then eliminated double-counting for assets involved in both strategies and determined that was $6.57 trillion was the overall total of SRI assets. By comparison, the total amount in the 2010 report was a little over $3 trillion.

“Conventional investment firms are increasingly active in creating and marketing targeted products for sustainable investors,” said Lisa Woll, the CEO of US SIF in a letter prefacing the report. “In recent years they have launched a variety of ESG-themed funds, created new staff positions for senior sustainable investment professionals and dedicated other resources to advance the field. Today, there is no longer any ‘typical kind of firm’ engaged in sustainable investment.”

Smith said there is also no longer a typical SRI investor. “We see more people who hold their values strongly but other, middle-of-the-road investors are taking the step because it makes sense due to the returns they’ve seen,” he said. 

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For more information on PAM Group, visit their Business Partner page.