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The 28th Annual SRI Conference
November 1–3, 2017 | Hotel del Coronado | San Diego, CA

History of SRI

More and more investors are beginning to understand that all investments have impact. The ways we spend and invest can dramatically influence both the fabric and consciousness of society.

Investment capital can finance either socially desirable or socially destructive businesses. Corporations may have either a positive or negative impact on people, communities, and our natural environment. Responsible investors, we seek to make money while using our money to catalyze a shift toward a more economically just and environmentally sustainable future.

A Brief History

The origin of what we now call Sustainable, Responsible, Impact (SRI) investing dates back centuries.

In biblical times, Jewish law laid down directives about investing ethically. Halal or Shariah-compliant investing is based on the Qur’an and the religious teaching of Islam. Generally, these principles focus on social justice and require that investors avoid interest (riba) and investments in businesses such as liquor, pornography, gambling, and banks. In the mid-1700s, the founder of Methodism, John Wesley, considered the use of money as the second most important subject of New Testament teachings.

For generations, religious investors whose traditions embrace peace and nonviolence have avoided investing in enterprises that profit from products designed to enslave or harm fellow human beings. It is likely that Methodist and Quaker immigrants brought the concept of values-based investing to the “new world.” The Quakers never condoned investing in slavery or war. Methodists have been managing money in the U.S. using what we now refer to as “ESG Integration” for over two hundred years.

The modern roots of this phenomenon can be traced to the impassioned political climate of the 1960s. During that tumultuous decade, a series of themes served to escalate sensitivities to issues of social responsibility and accountability. Concerns regarding the Vietnam War, civil rights, and equality for women broadened during the 1970s to include labor/management issues and anti-nuclear convictions. The ranks of responsible investors grew dramatically in the 1980s as millions of people, churches, universities, cities, and states focused investment strategies on pressuring the white minority government of South Africa to dismantle the racist system of apartheid. Then, with the Bhopal, Chernobyl, and Exxon Valdez incidents, the environment became top of mind for socially conscious investors.

In recent years, school shootings, human rights, respect for indigenous peoples around the world, and safe and healthy working conditions in factories that produce goods for U.S. consumption have become rallying points for investors with dual objectives for their investment capital. Most recently, the climate crisis has awakened investors to opportunities inherent in directing investment capital toward a truly sustainable future.

Three Dynamic Strategies

A sustainable and responsible approach to investing includes both quantitative and qualitative analysis. All investors look for profit potential, but responsible investors also integrate an evaluation of environment, social, and governance (ESG) factors into the investment decision-making process with a keen eye on the impact portfolio companies have on our world.

A double bottom line (quantitative + qualitative) analysis provides the basis for designing investment portfolios aligned with personal values and social priorities, while delivering the returns needed to achieve an investor’s financial goals. It’s a rigorous financial process that considers the impact of an investment on all stakeholders.

ESG Integration. Management of environment, social, and governance issues can have a material influence on company profitability, value, and share price. Qualitative ESG analysis offers valuable insights into corporate policies, practices, culture, and impacts. Analysis of ESG factors can help illuminate corporate character and identify better-managed companies.

Shareowner Engagement efforts include dialoguing with companies and filing proxy resolutions to encourage more responsible corporate citizenship and more positive impact on society at large. Efforts are focused on improving financial performance over time and enhancing the well-being of all stakeholders—customers, employees, vendors, shareowners, communities, and the natural environment.

Community Impact Investing directs capital to people in low-income, at-risk communities where it is difficult to access financing through conventional channels. Many socially conscious investors earmark a percentage of their
investment portfolios to community development financial institutions (CDFIs) that work to alleviate poverty, create jobs, provide affordable housing, and finance small business development in disadvantaged communities.

$6.57 Trillion*

Responsible investing is no longer a fringe idea. The 2014 Report on U.S. Sustainable, Responsible, and Impact Investing Trends* has identified $6.57 trillion in professionally managed portfolios using one or more of the dynamic investment strategies that together define Sustainable, Responsible, Impact investing in the U.S.

In the seventeen years between the first Trends Report in 1995 and the most recent report in 2014, responsibly managed asset pools have grown from $639 billion to over $6.57 trillion, an increase of 929%—a compound annual growth rate of 13.1%. Responsibly invested assets grew 76% between 2012 and 2014 alone!*

As of early 2014, nearly one out of every six dollars under professional management in the United States was involved in some form of sustainable and responsible investing—nearly 18% of the $36.8 trillion in total assets under professional management in the U.S. tracked by Ceruli Associates.*

What Is Fueling the Growth?

Information. Investors are significantly better educated and informed today. ESG research organizations provide higher quality information than ever before. The better informed investors are, the more responsible our actions tend to be.

Climate Change. As consumers and investors are becoming increasingly aware of both the dangers and business opportunities embodied in the climate crisis, more and more are looking to eschew companies contributing to the problem and invest in solutions.

Performance. An impressive body of academic evidence plus real world results effectively dispels the myth that investing in a more thoughtful, responsible manner will automatically result in underperformance. Investors are realizing that responsibility can walk hand-in-hand with prosperity.

Availability. Responsible investment options are increasingly being offered within retirement plans, and a socially conscious investor can now choose from among hundreds of funds and investment managers to populate a longterm investment portfolio—regardless of size.

Values and Authenticity. A large and growing segment of the investing public is seeking to reflect their personal, moral, ethical values in all aspects of their lives. Responsible investors are recognizing that money has impact, and consciously making consumer purchase and investment decisions that enhance the common good.

Corporate Scandals. Numerous recent instances of accounting fraud and other scandals have eroded trust in company leadership. Many investors are attracted to an investment process based on research that goes deeper into corporate behaviors and impacts.

Women. As women have filled the ranks of MBA programs and law schools, climbed corporate ladders, started their own companies, received large inheritances, and assumed roles as fiduciaries, many have brought an affinity for a more caring approach to investing with them.

Millennials. Born between the early 1980s and the early 2000s, at 85 million strong, the millennial generation is the largest in American history. It’s a generation that seeks to make a difference in society through the jobs they hold, the products they buy, and the investments they make. Millennials are beginning to inherit trillions of dollars from Baby Boomers—and their influence as impact-oriented investors is already being felt.

Author: Steven J. Schueth is President of First Affirmative Financial Network, LLC, an independent Registered Investment Advisor specializing in offering Sustainable Investment Solutions™ for socially conscious, purpose-driven investors (SEC File #801-56587).

Mention of specific companies or securities should not be considered a recommendation to buy or sell that security. Past performance is no guarantee of future investment results.

The SRI acronym (Sustainable, Responsible, Impact) reflects the common threads that weave the motivations of many socially conscious investors together: Putting investment capital to work toward creating a truly sustainable future; owning shares of the most responsible companies; while making money and having a positive impact—all at the same time.

* 2014 Report on Sustainable and Responsible Investing Trends in the United States. US SIF: The Forum for Sustainable and Responsible Investment is the nonprofit membership association for the responsible investment industry in the U.S. (

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