Socially Responsible Investing: Is It Really That Popular?
The whole concept of socially responsible investing (SRI) is not a new concept at all – in fact it has been around for hundreds of years. The earliest origins of socially responsible investing date back to the Religious Society of Friends (or better known as Quakers) in 1758. The Quaker Yearly Meeting in Philadelphia actually prohibited members from participating in the slave trade for moral and ethical reasons, though at the time was incredibly profitable.
While it's true that it took another 100 years to abolish slavery, just think about how quickly society can evolve in the modern day? The earliest forms of SRI were religiously motivated, as was the case with John Wesley, who was one of the founders of the Methodist Church and one of the earliest adopters of SRI. In the mid-18th Century, Wesley gave a sermon called “The Use of Money” where he introduced the concept of investing money is such as way as to “not harm your neighbor through your business practices” and “avoid harmful chemicals that could compromise the health of workers.” You can see how nowadays these can evolve to include consideration of environmental impacts, civil rights, and energy usage.
Over the last few hundred years, SRI funds have evolved into the modern day to become increasingly popular and are incredibly profitable – in fact, assets in socially screened portfolios have climbed to a total value of $5.67 trillion at the beginning of 2014, that’s a 76% increase from 2012.
From 1995, when the US SIF Foundation first started measuring sustainable investing trends, the SRI universe has increased tenfold in the last 20 years – by 929% or a compounded annual growth rate (CAGR) of 13.1%. This return is far superior than the average return of the stock market and the 0.00008% interest payment you're currently getting in your savings account.
As of 2014, one is six dollars invested under professional management in the United States is involved in socially responsible investing – that accounts for about 18% of the total $36.8 trillion in total assets under management. Frankly, it should be six in six dollars, but I have faith that we will get there someday.