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SRI Performance
"Will I sacrifice financial return if I choose an SRI orientation?"
"Will I sacrifice financial return if I choose an SRI orientation?"
Understandably, this is the most often-asked question from concerned investors.
And, the simple answer is NO.
Critics argue that SRI is likely to under perform over the long term because SRI
portfolios limit their available investment universe. Of course, this claim can
be made against any investment manager using a particular investment style,
whether it be capitalization driven (eg: only investing in small-cap companies)
or sector specific (eg, focusing heavily on the biotechnology or semiconductor
companies). What makes SRI the target of selective criticism is that many
traditional Wall Street firms do not understand the social criteria being
analyzed and choose to either ignore it, or worse, attack it.
SRI advocates, including PAM, believe that finding factors (not recognized by
the market) having an impact on the enterprise value of a company will add value
to a client's portfolio. PAM's social
screening methodology
seeks to expose hidden risks and liabilities a company faces while also
identifying quality management and governance practices.
You be the judge. The resources below includes studies, books and articles that
address the question of performance in SRI portfolios. Our conclusion is that
SRI incurs no financial sacrifice and, in some cases, can provide for additional
portfolio value.
SRI Studies *
An
exhaustive bibliography of quantitative studies looking at the impact of social
screening on investment performance.
The SRI Advantage
Why Socially Responsible Investing Outperforms Financially *.
Written and edited by PAM co-founder Peter Camejo, this book makes a strong case
for SRI's outperformance and then examines the implications for investment
professionals, investors, pension funds, and community & non-profit groups.
Corporate Responsibility & Financial Performance
The Paradox of Social Cost *.
Pava & Krausz' landmark 1995 book reports the results of two original empirical
studies on the relationship between corporate social responsibility and
traditional financial performance. Included is a review of 21 empirical studies
testing the SRI outperformance claim. Of these studies, 12 indicated that SRI
outperforms, 8 indicated no loss or gain in performance, and 1 reported lower
performance.
Finally, the
Social Investment Forum * annually awards the Moskowitz Prize to
the research paper that has the greatest impact in the SRI industry. Among the
recent recipients are:
* PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of these web-sites provided here, you are leaving this site. Progressive Asset Management and Financial West Group make no representation as to the completeness or accuracy of information provided at these sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, sites, information and programs made available through this site. When you access one of these sites, you are leaving Progressive Asset Management's web-site and assume total responsibility and risk for your use of the sites you are linking to.
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Progressive Asset Management and
Financial West Group are
affiliated entities.
Progressive Asset Management
1814 Franklin Street, Suite 503, Oakland, CA 94612
(800) 786-2998
Member FINRA/SIPC |
