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2005 Report on Socially Responsible 2005 Report on Socially Responsible Investing Trends in the United StatesInvesting Trends in the United States
Social Investment ForumIndustry Research Program
January 2006
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Content and MethodContent and Method
Three core SRI strategies measured:Social and Environmental ScreeningShareholder AdvocacyCommunity Investing
Measures involvement in SRI strategies as of December 31, 2004
Quantitative, behavioral analysis: quantifies strategic behavior rather than gauging SRI marketing or intent
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What is SRI?What is SRI?
Socially Responsible Investing (SRI) is an investment process that considers social and environmental consequences of investments, both positive and negative, within the context of rigorous financial analysis.
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SRI in the US SRI in the US -- 20052005
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Assets in SRI Assets in SRI -- 20052005
SRI strategies:
• Screening: $1,685 billion• Shareholder Advocacy: $703 billion• Screening + Advocacy: ($117 billion)• Community Investing: $20 billion
• Total: $2.29 trillion
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Socially ScreenedSocially ScreenedMutual FundsMutual Funds
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Socially Screened Socially Screened Mutual Funds Mutual Funds •• 19951995--20052005
0
20
40
60
80
100
120
140
160
180
US
$ B
illio
ns
1995 1997 1999 2001 2003 2005
Assets: $179 bn in 2005
18.5% growth in assets since 2003
15-fold increase since 1995
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Socially and Environmentally Socially and Environmentally Screened Funds Screened Funds •• 20052005
2005 Totals$179 bn total assets201 screened funds
Mutual Funds$148 bn total assets 151 funds
Variable Annuities$11 bn22 underlying funds
Other Pooled Products$19 bn28 portfolios
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Mutual Fund Screening Mutual Fund Screening Frequency Frequency •• 20052005
Multiple Screening Predominates
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Most Prevalent Screens Most Prevalent Screens in Mutual Funds in Mutual Funds •• 20052005
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Mutual Fund ScreeningMutual Fund ScreeningAssetAsset--Weighted Weighted •• 20052005
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Mutual Fund Flows: Mutual Fund Flows: Equity FundsEquity Funds
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Mutual Fund Flows: Mutual Fund Flows: FixedFixed--Income FundsIncome Funds
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Socially Screened Socially Screened Separate AccountsSeparate Accounts
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Institutional Investor Institutional Investor Involvement in ScreeningInvolvement in Screening
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Social Screening by Social Screening by Institutional InvestorsInstitutional Investors
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Shareholder AdvocacyShareholder Advocacy
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Social Shareholder Social Shareholder Resolutions Resolutions •• 20032003--20052005
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Social Shareholder Resolutions Social Shareholder Resolutions Proposed Proposed •• 20012001--20052005
0
50
100
150
200
250
300
350
400
2001 2002 2003 2004 2005*
Source: IRRC * 2005 data through 8/31/05
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Leading SocialLeading Social--Issues Issues Resolutions 2003Resolutions 2003--20052005
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Shareholder SuccessesShareholder Successes
6 Key Examples
Climate Risk and Global WarmingPolitical Contributions DisclosureCSR and Sustainability ReportingAnti-bias Employment PoliciesGlobal Health PandemicsInternational Labor Standards
& Human Rights
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Key Advocacy TrendsKey Advocacy Trends
4 Key Examples
Mutual Fund Proxy Disclosure
More Public Proxy Voting by Institutions
Active University Endowments
Investor Network on Climate Risk
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The Corporate The Corporate GovernanceGovernance--SRI NexusSRI Nexus
5 Key Examples
Climate RiskImproved Shareholder Proxy AccessExcessive Executive CompensationBoard Diversity, Composition, and IndependenceSocial and Environmental Risk Management
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Community InvestingCommunity Investing
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Impressive Growth in Community Impressive Growth in Community Investing CapitalInvesting Capital
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Expansion of Community Expansion of Community Investing Sectors Investing Sectors •• 19991999--20052005
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Community Investing Community Investing Institutions TodayInstitutions Today
Banks:$10.15bn
Credit Unions:$ 5.10bn
Loan Funds:$ 3.44bn
Venture Capital: $ 0.87bn
TOTAL $19.6BN
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Emerging Trends in SRIEmerging Trends in SRI
Sudan Divestment and DialogueRiding the “Green Wave”
“Environmental Equity” MandatesCleantech and Green Energy
New SRI ProductsExchange-Traded Funds (ETFs)New Socially Screened Funds & IndicesAlternatives: SRI Hedge Funds and “Double Bottom Line” Private Equity and VC
Widened Access to Community InvestingGlobalization of SRI
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SponsorsSponsorsAltruShareSecuritiesCalvertChristian Brothers Investment Services, Inc.Citizens FundsCo-op AmericaDomini Social Investments, LLCThe Dreyfus CorporationFirst Affirmative Financial Network, LLCInstitutional Shareholder Services, Inc.KLD Research & Analytics, Inc.
Light Green Advisors, LLCNeuberger Berman, LLC, A Lehman Brothers Co.Opportunity Finance NetworkPax World FundsTrillium Asset Management CorporationUnited Methodist Church General Board of Pension and Health BenefitsWalden Asset Management, a Division of Boston Trust & Investment Management
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Note on Chart FiguresNote on Chart Figures
The numbers identifying the charts in this presentation pertain to the chart numbers in the complete “2005 Report of Socially Responsible Investing Trends in the United States.” The report is available at www.socialinvest.org.
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About the PublishersAbout the Publishers
The Social Investment Forum Foundation is a national nonprofit organization providing research and education on socially responsible investing. The Forum Foundation provides cutting-edge research on the trends, practice, performance, and impact of social investing.
The Social Investment Forum, Ltd. is a national nonprofit membership association dedicated to promoting the concept, practice, and growth of socially and environmentally responsible investing.
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2005 Report on Socially Responsible 2005 Report on Socially Responsible Investing Trends in the United StatesInvesting Trends in the United States
Social Investment Forum1612 K Street, NW, Suite 650
Washington, DC 20006(202)872-5319
www.socialinvest.org