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ESG/SRI Investing

History 

The history of using values to determine business practices/investments dates back many centuries.  This is rooted in religious attitudes that were against slavery and more specifically, for basic human rights.

The first investment option for the general public which integrated values was established in the early 1970s.There was growth in this space in the 1980s and 1990s.

The Rise of Socially Responsible Investing

However, it was the first decade of the 2000s that saw tremendous growth in investing with both profit and impact in mind.  This growth is best documented by the US SIF Foundation’s 2012 Report on Sustainable and Responsible Investing Trends in the Unites States. The research shows that from 1995 to 2012 the SRI universe “increased 486 percent, while the broad universe of assets under professional management in the United States, according to estimates from Thomson Reuters Nelson, has grown 376 percent.”1

General consensus states that this growth has been led by institutions via endowments and pension funds. However, the number of SRI mutual funds grew from 55 in 1995 to 720 in 20121 demonstrating a growing demand by the general public.

There are many names ascribed to the integration of values or impact within an investment strategy.  Historically, this has been referred to as Socially Responsible Investing (SRI). The original intent of SRI was to exclude companies from an investment strategy that violated an individual’s or institution’s values.  These investments included alcohol, firearms, tobacco etc… also referred to as “sin stocks”.

Recent Trends: Rise of Impact Investing

Over the last several years, many have begun to refer to SRI as “sustainable and responsible investing” to better reflect an evolution from negative or exclusionary screens to also incorporate positive screens whereby companies are included for their positive impact on environmental, human rights and governance criteria. This is also why many now refer to SRI as “ESG” investing (Environmental, Social & Governance).

In 2007 another term was birthed: “Impact Investing”. With impact investing an investor can make strategic investments into a for-profit company or nonprofit organization to provide capital to support the growth of the mission while also capturing a financial return – either through equity ownership or interest payments made through the issuance of debt.

While the terms and the industry are ever evolving, SRI and ESG allow investors to align their objectives for financial return with their values, charitable missions or social impact desires. Three Corners Capital was founded on this premise. Let us know if you have questions or how we might be able to help in your planning.

Check out our planet, people, and profit pages to see the impact your investments can make.  

 

Contact us to learn more.

 

1 – US SIF Foundation 2012 Report On Sustainable and Responsible Investing Trends in the United States. Authors: Meg Voorhes, US SIF Foundation; Joshua Humphreys, Tellus Institute; Ann Solomon, Tellus Institute.