Socially Responsible Investment (SRI)

Definition

Socially Responsible Investment is the integration of social, environmental, and ethical concerns into individual or institutional investment decision-making. SRI takes into account both the investor's financial needs and an investment's impact on society. The three main SRI strategies are screening, shareholder advocacy, and community investment.

In the US at the end of 2004, the amount of funds managed by SRI principles had grown 360% in ten years to reach $2.29 trillion (¥270 trillion) and now represents 9.4% of the total managed assets tracked in Nelson Information's Directory of Investment Managers *1. In Canada as of the middle of 2004, SRI funds had grown 31% in four years to reach C$65.5 billion (¥6.9 trillion). In Europe at the end of 2005, SRI had doubled in three years to reach €1.33 trillion (¥150 trillion), which is estimated to represent 10-15% of the total assets under management *2.

In Australia, as of the middle of 2005, SRI-managed portfolios reached A$76.7 billion (¥6.8 trillion), representing a 70% increase from the previous year and 2400% growth in five years. In Japan, the Eco Funds that began appearing in 1999 are considered the country's first SRI portfolio funds. As of August 2006, over 30 different SRI funds in Japan are comprised of funds valued at ¥360 billion representing 0.4% of the total investment in investment trust accounts. SRI funds in corporate pension accounts add another ¥40 billion bringing the total amount of SRI funds in Japan to ¥400 billion. In recent years, in addition to ethical considerations, a growing number of investors have also begun integrating social and environmental considerations into the investment decision-making of their funds.