What's Driving the Growth in Socially Responsible Investing?

The prominence of Socially Responsible Investing (SRI), which integrates environmental, social and governance (ESG) issues into financial analysis and decision-making, has grown exponentially since the mid-1990s. SRI investment in the U.S. alone grew from $639 billion in 1995 to $3.74 trillion in 2012, according to the U.S. Social Investment Forum.

BNY Mellon Case Study: ESG Thought Leadership

In late 2012, we published a paper for our Thought Leadership series that analyzed trends in ESG investing to help investors make sense of this increasingly important topic. Based on a survey of the company's existing Asset Servicing clients, the paper examined if, how and why ESG concerns are incorporated into the investment process. Our findings revealed that:

– 80 percent of firms believe there is no performance tradeoff between SRI/ESG strategies and traditional investments;
– 35 percent of public funds have adopted SRI/ESG strategies, compared to 27 percent of foundations and endowments, and 16 percent of corporate pensions;
– screening of portfolios was the most common ESG strategy;
– human rights, weapons and tobacco were identified by the client base as the most important ESG issues;
– many clients rely on managers to monitor ESG screens (BNY Mellon recommends independent monitoring as best practice); and
– 52 percent of clients in Europe, the Middle East and Asia and 31 percent of clients in the Americas believe that ESG will become more important to their organizations in the future.

Findings and feedback from this study will be used to inform our ESG product development process in order to meet evolving client needs. Learn more about socially responsble investing and how BNY Mellon is invested in market integrity in the 2012 CSR report.