Ethical Performance
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US SRI market tops $2trillion

February 2002

Socially responsible investment continues to grow strongly in the US and has not been adversely affected by the recent market downturn.

The value of total assets under management in portfolios screened for socially concerned investors rose 36 per cent from $1.49trillion (£1.04tn) in 1999 to $2.03tn in 2001, according to the US Social Investment Forum.

This growth in socially screened funds is more than 1.5 times the 22 per cent growth rate reported for all US investment assets during the same two-year period, the forum’s 2001 report on responsible investing trends in the US says. The current value of US investment assets of all types is around $19.9tn.

On the SRI figures, the Social Investment Forum said: ‘This data would be remarkable at any point in time, but it is particularly striking when you realize that we had bearish markets for most of the time period covered by this study.’

The US forum’s figures include ‘all professionally managed investment assets that fit within the strategies of socially responsible investing’, including mutual funds with at least one social screen. They exclude the investments of ethically-minded individuals directly purchasing equities.

Tobacco was the most widely used exclusion criterion, the forum found. Other oft-screened sectors were weapons, human rights, equality, alcohol, the environment and gambling.

The forum defines socially responsible portfolios as those managed according to one or more of three strategies: screening, shareholder advocacy and ‘community investing’, which is defined as ‘financing that generates resources and opportunities for economically disadvantaged people in urban and rural communities in the US and abroad that are under-served by traditional financial institutions’.

In the UK, ethical investment more than doubled its share of overall retail investment sales between the end of 1999 and the end of 2001, market analyst Mintel estimates. Sales of UK ethical investment products accounted for 3.3 per cent of all investment in unit trusts and other retail investment funds in 2001. The equivalent figure for 2000 was 1.6 per cent.

The 3.3 per cent retail market share in 2001 means in that year investment in ethical funds outstripped technology funds, which represented only 2.7 per cent of overall sales, according to Mintel.

Retail ethical investment sales rose only by 0.7 per cent, from £279million in 2000 to £281m in 2001. But in this period total net retail sales of unit trusts and open-ended investment companies fell by 48.5 per cent to £8.6bn.

The figures for the US and the UK are not comparable due to the different methods used to compile them.


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