Socially Responsible Investing Facts & Figures
One of the most effective ways to bring about social change is how we invest our money and for many people, their largest accounts are their retirement investment accounts. This type of investing is known as socially responsible investing (SRI). SRI are investments that are considered socially responsible due to the nature of the business the company conducts. Another term for SRI is ESG investing which takes a company’s environmental, social and governance factors (ESG) into consideration.
The broadly defined the ESG market is expected to reach $45 trillion in Assets under Management (AUM).
The global market size of impact investing is estimated at $1.16 trillion.
Between 2013 and 2021, impact investing market grew at 45% Compound Annual Growth Rate (CAGR) from $25.4 billion to $1.16 trillion.
70% of Americans believe it’s either “somewhat” or “very important” for companies to make the world a better place.
41% of Millennial investors put a significant amount of effort into understanding a company’s Corporate Social Responsibility (CSR) practices, compared to 27% of Gen X and 16% of Baby Boomers.
95% of employees believe businesses should benefit all stakeholders—not just shareholders— including employees, customers, suppliers, and communities they operate within.
Water, sanitation, and hygiene (WASH) is the fastest growing sector with annual growth rate of 33% from 2015 to 2019.
81% of investors consider impact investing is an efficient way to meet their impact goals.
87% of investors say that impact investing was central to their commitment as responsible investors.
60% of investors target both social and environmental impact, while 34% target only social impact and just 6% focus solely on environmental impact objectives.
68% of investors address climate change through their impact investments.
88% of impact investors report meeting or exceeding their financial expectations.
Europe and North America account for more than 90% of the ESG market.
One example of socially responsible investing is community investing, which goes directly toward organizations that both have a track record of social responsibility through helping the community, and have been unable to garner funds from other sources such as banks and financial institutions. The funds allow these organizations to provide services to their communities, such as affordable housing and loans. The goal is to improve the quality of the community by reducing its dependency on government assistance such as welfare, which in turn has a positive impact on the community’s economy.
Protecting the environment and eliminating hunger are common themes in faith-based investing, so sustainable food systems are sometimes the topic of resolutions. The JLens Investor Network, which aims to promote Jewish values, filed a resolution with Amazon asking the company to report on the effect of food waste in its operations. The resolution notes that food waste results in avoidable greenhouse gas emissions and redistributing the food could reduce food insecurity.
Similarly, Mercy Investment Services, an impact investor promoting Catholic values, led an ICCR resolution with Dine Brands asking the company to study the possible effects of reducing food waste. The resolution cites a study that found that 8% to 10% of greenhouse gas emissions caused by humans stem from food waste and argues that eliminating waste could reduce hunger.
SRI Increasing Interest
Demand for Environmental, Social and Governance (ESG) investments soared has been increasing. Nearly 60% of respondents to a recent survey indicated an increase in interest in ESG investments and 19% reported incorporating ESG standards into their portfolios.
Shareholder advocacy differs from SRI in that shareholders are co-owners of the public corporations they invest in. Thus, they have rights which enable them to engage with corporate leadership on issues that are important to them such as environmental, social, and corporate governance. Faith-based investors have a long history of using shareholder advocacy to bring attention to important corporate social responsibility issues to prompt companies to take action and contribute to positive outcomes for society.
Examples of Shareholder Advocacy
Shareholders often put forth protest votes against company policies. GE, for example, has faced protest votes seeking to get the firm to stop engaging in the manufacture of components that can be used to construct landmines. Other firms have faced votes designed to change their environmental policies. Executive compensation has also become a hot topic in recent years.