January 26, 2006
Social Investment Forum Trends Report Tracks Rises and Falls of Socially Responsible Investing
by William Baue
The 2005 report documents increases since 2003 in assets overall in SRI, in SRI mutual funds, and
in shareholder advocacy, but decreases in overall screened assets and in screened separate
Is socially responsible investing (SRI) growing, shrinking, or holding its own? These are the
questions on the minds of readers of the 2005 Trends
Report from the Social Investment Forum (SIF), which released the most recent edition of this
biennial study earlier this week. The answer is: all three, depending on how you slice the data.
The overall amount of money (or assets under management, AUM) invested in one or
more of the three main SRI strategies (screening, shareholder advocacy, and community investing)
grew to $2.29 trillion in 2005 from $2.16 trillion in 2003. However, this represents a decline
from the peak of $2.32 trillion in 2001.
Nearly one in ten dollars is now invested in SRI
(9.4 percent of the $24.4 trillion in total assets under professional management according to the
Directory of Investment Managers from Nelson Information), but
this ratio is down from one in nine dollars in 2003. Looking at the long-term, the 258 percent
growth in overall SRI assets during the decade since the first SIF Trends Report
in 1995 has slightly outpaced the 249 percent rise in the overall market, a distinction heightened
when isolating the role of mutual funds.
"It's clear that the combination of competitive
performance, screening, and advocacy on behalf of their investors offered by SRI mutual funds are
making them an increasingly attractive option for a wide range of investors," said Alisa Gravitz,
vice president of SIF and executive director of its sister organization, Co-op America. "SRI mutual funds have grown from $12
billion in 1995 to $178.7 billion in 2005, far outpacing the overall growth of mutual funds in the
While the report notes that this represents a 15-fold increase for SRI mutual
funds, it does not provide comparative statistics for the growth of assets in the overall mutual
fund universe over the past decade. It does discuss dynamics in the application of screens on
mutual funds and on the other component of screened assets, separate accounts managed for
individuals and institutional investors.
"Based on the survey of the entire universe of
201 socially screened funds in the US, the Social Investment Forum has found that tobacco remains
the most commonly applied social screen, affecting the investment management of 162 funds with $159
billion in total net assets, or more than 88 percent of the total assets in the socially screened
universe," states the report. "Since 2003, the total assets in socially screened separate accounts
declined from $1.99 trillion [to $1.51 trillion in 2005], as single-issue screening on issues such
as tobacco waned and institutional investors embraced their roles as staunch shareholder
Indeed, the number of social and environmental shareholder resolutions filed
increased from 299 in 2003 to 348 in 2005. Assets managed using the second SRI strategy of
shareholder advocacy also rose from $448 billion in 2003 to $703 billion in 2005 (though this
represents a decrease from the high of $922 billion in 1999.)
Of course many social
investors practice both screening and shareholder advocacy, so SIF subtracts this overlap
from the total to avoid double-counting. This overlap decreased almost fourfold from $441 billion
in 2003 to $117 billion in 2005, demonstrating that social investors migrated in large numbers from
employing these dual SRI strategies to using shareholder advocacy in isolation.
the report documented the continuing maturation of community investment.
investing experienced tremendous growth from 2003 to 2005," said Jean Pogge, vice chair of SIF's Community Investing Program and
senior vice president of Mission-Based Deposits for ShoreBank in Chicago. "In
total, community investing expanded by two-fifths over the period."
"And assets in
community investing expanded even more dramatically over the past ten years," she added. "In 1995,
community investing assets totaled $4 billion, and have since grown almost 400 percent to the $19.6
billion found in this report."
The report concludes noting the increasing globalization of
SRI, with increases in assets under management in Canada, Europe, Australia, Japan, and emerging
markets. The report's departing note explains methodology, pointing out developments in
methodological sophistication combined with the inherent limitations of comprehensive data
collection on SRI result in a conservative bias toward undercounting of SRI assets.