Socially responsible investing in U.S. tops two trillion dollar mark

Source: The Social Investment Forum, 15 November 1999

More than $2 trillion is invested today in the United States in a socially responsible manner, up a strong 82 percent from 1997 levels, according to a study released today by the nonprofit Social Investment Forum. The $2.16 trillion includes all segments of social investing screened portfolios, shareholder advocacy and community investing and accounts for roughly 13 percent of the $16.3 trillion under professional management in the U.S., as reported by The 1999 Nelsons Directory of Investment Managers.
Social Investment Forum President Steve Schueth said: "The clear message from this data is that
socially responsible investing is now firmly on a path of steady growth thanks to the nearly
universal acceptance of social investment as a viable and value-added approach to asset
management. Clearly, a growing number of American individuals and institutions are insisting that
their money be invested in a fashion that is aligned with their values. At the same time, it is clear
that the strong performance of social investing in recent years has played a major role in the influx
of assets."

Social Investment Forum Vice President and Co-op America Executive Director Alisa Gravitz commented:
"Socially responsible investing is a powerful concept. Its strong performance and ability to improve corporate responsibility gets peoples attention. So more and more investors are saying, This looks good Im in! For example, employers are increasingly receptive to workers requests that socially responsible options be available in defined benefit and contribution plans."

How does the 82 percent rise from 1997 to 1999 in socially responsible assets compare to the growth in the stock market during the same period? One telling yardstick: socially responsible assets grew at roughly twice the rate of all assets under management in the U.S., which, according to a comparison of the 1997 and 1999 Nelsons Directories, climbed 42 percent during the 1997-1999 period.

Major findings of the Forums 1999 Report on Socially Responsible Investing Trends in the United States

1.Socially screened portfolios see explosive growth. Since 1997, total assets under management in screened portfolios for socially concerned investors rose 183 percent, from $529 billion to $1.49 trillion.

2.Ranks of socially responsible mutual funds continue to swell. The number of screened mutual funds increased to 175 in 1999 from 139 in 1997, and just 55 in 1995. Assets in screened mutual funds grew by 60 percent from 1997 to 1999. Screened mutual fund assets expanded to $154 billion in 1999 from $96 billion in 1997, and up from just $12 billion in 1995.

3.SRI grows as retirement plan alternative. Employers are increasingly offering socially screened investment options as part of retirement plans and employees are increasingly moving assets into them. A recent survey by Calvert Group shows that 35 percent of mutual fund investors with defined contribution retirement plans at work said that their employer offers a socially screened investment option, more than double the 16 percent found in 1996. Management reports that over the past two years, defined benefit plans have grown from about 1 percent to more than 33 percent of the assets in the Domini Social Equity Fund. Citizens Funds and other socially responsible mutual funds are reporting similarly spectacular growth in retirement assets within their funds.

4.Tobacco remains top concern for social investors. An investment policy prohibiting investments in tobacco is almost universal among socially concerned investors. Fully 96 percent of socially screened portfolios avoid tobacco. Beyond tobacco, social investors share a broad common ground in their choice of portfolio screens. In addition to tobacco, the majority of assets are screened for gambling (86 percent), alcohol (83 percent), weapons (81 percent), and the environment (79 percent). Other screens include human rights (43 percent), labor issues (38 percent), birth control/abortion (23 percent), and animal welfare (15 percent).

5.Social investors active in shareholder advocacy control nearly a trillion dollars. Over 120 institutions and mutual fund families have leveraged assets valued at $922 billion in the form of shareholder resolutions. These institutional investors used the power of their ownership positions in corporate America to sponsor or co-sponsor proxy resolutions on social issues. They also voted their proxies on the basis of formal policies embodying social responsibility goals and actively worked with companies to encourage more responsible levels of corporate citizenship.

6.Socially responsible investors increasingly are using both screening and shareholder advocacy to encourage greater corporate responsibility. The fastest growing component of socially responsible investing is the growth of portfolios that employ both screening and shareholder advocacy. Assets in portfolios utilizing both strategies grew 215 percent, from $84 billion in 1997 to $265 billion in 1999.

7.Community investing grows by 35 percent. Assets held and invested locally by community development financial institutions (CDFIs) totaled $5.4 billion, up from $4 billion in 1997. This critically important capital is invested in community development banks, credit unions, loan funds and venture capital funds, and is focused on local development initiatives, affordable housing and small business lending in many of the neediest urban and rural areas of the country.

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