In the light of the financial crisis SRI (Socially responsible investment) became popular as never before. SRI has already been around for quite some time before the crisis, but this industry has never seen such a volume increase as in the last 4 years. The EU market for SRI almost doubled since 2007 (Cropper, 2010). This clearly shows that the events forcing the financial crisis motivated investors to rethink their criteria for making their investment decisions. Naturally, such a high growth rate of an industry comes from an increasing demand. In order to satisfy the increasing demand for SRI products the SRI industry is going threw a ‘transformative’ and ‘innovative’ phase exploring new areas for SRI, creating new products and services. However, SRI investment has a very broad definition band and cannot be boxed in easily. Hence, as good as it might be, SRI investment brings also many challenges with it, because it is such a broad concept.
Therefore, the purpose of this paper is to give an overview about what SRI is and to find answers to the question of “How sustainable SRI is?”
In the first chapter the paper will discuss the different definitions and motivations for SRI investments. The second chapter will take a closer look on the history of the SRI market and the different categories and approaches to create an SRI portfolio. Further it will present the available product categories of the SRI market. The third chapter will analyse the development of the SRI market in Europe and the US. In the fourth chapter the performance of socially responsible investment will be analyzed. Finally the fifth chapter will discuss the main constraints of SRI.
Table of content:
1. Introduction
2. Definition and Motivation of SRI Investment
2.1. Definition
2.2. Motivation for SRI investment
3. SRI Market
3.1. History of SRI
3.2. SRI categories
3.2.1. Environmental issues:
3.2.2. Social SRI
3.2.3. Religious or ethical investments
3.2.4. Corporate governance
3.3. Different approaches for an SRI portfolio creation
3.3.1. Screening / Best in class
3.3.2. Shareholder Advocacy / Engagement
3.3.3. Community Investing:
3.4. SRI products
3.5. Product providers
3.6. SRI Indices
4. Development of the SRI market
4.1. Europe:
4.2. USA
4.3. Asia
5. Performance of SRI investments
5.1. Performance of investor activism
5.2. Social Return on SRI-Investment
5.3. Financial Performances and Cost of SRI investments:
5.3.1. SRI Investment performance between 1995 - 2007
5.3.2. SRI Investment performance between 2008 - 2010
5.3.3. The financial cost of SRI investments
6. Constraints of SRI investment
7. Conclusion
Frequently Asked Questions
What does SRI stand for?
SRI stands for Socially Responsible Investment, an investment strategy that considers environmental, social, and ethical criteria alongside financial returns.
How did the financial crisis impact the SRI market?
The financial crisis motivated investors to rethink their criteria, leading to a significant increase in demand. The EU market for SRI almost doubled since 2007.
What are the common categories of SRI?
Common categories include environmental issues, social SRI, religious or ethical investments, and corporate governance.
What approaches are used to create an SRI portfolio?
Approaches include Screening (Best-in-class), Shareholder Advocacy/Engagement, and Community Investing.
What are the main constraints of SRI?
The main constraints involve its broad definition, which makes it difficult to "box in," and various challenges related to performance measurement and standardization.
- Quote paper
- Kerstin Strasser (Author), 2011, Socially Responsible Investment, Munich, GRIN Verlag, https://www.grin.com/document/184058
