Socially conscious investing has quadrupled in the past decade


Investors like their money to make money. But increasingly, according to a new report from the Harvard Business Review , they expect it to do good, too.

In 2010, environmental, social, and governance (ESG) investments made up approximately $3 trillion of all professionally managed assets.

As of the beginning of last year, that number had quadrupled to $12 trillion 1 in every four invested in the US.

Investors are speaking with their wallets, the report explains, and have an active interest in the social and environmental decisions their money funds on both a governmental and corporate level. “They can be quick to punish companies for child labor practices, human rights abuses, negative environmental impact, poor governance, and a lack of gender equality.”

In response to growing investor awareness about climate change, rating companies such as Moody’s increasingly consider climate risk as a negative factor when assessing credit ratings. That’s the good news.

The less good news is that the criteria for ESG investment can be vague—or so easy to meet as to be almost meaningless. It includes exclusionary screening, for instance, where funds divest from harmful industries such as weapon markers or the so-called “sin industries” (pdf) —gambling, pornography, tobacco and alcohol.

Harm may be mitigated by excluding investment in these industries, but there isn’t necessarily the same commitment to actually doing good.

A fund’s holdings may count as ESG investments, but still contain shares of oil companies, for example, because they weren’t specifically excluded. Last year, Pictet Asset Management forecast that ESG assets would comprise around two-thirds of assets managed by global funds by 2020.



The purpose of this site is to serve as a daily news source and learning point for ESG, SRI and Impact investment trends and to promote awareness of environmental, social and governance issues and opportunities. 

The information provided by this site is not a recommendation to invest or purchase products. This site does not take into account your particular investment objectives, financial situation or investment needs, all of which should be considered prior to making an investment decision. We encourage seeking professional financial advice before making any investment decision.

 By Responsible-Investors ©