Institutional Investors Say SRI Leads to Better Corporate Behavior

December 3, 2007 ( - Organizations that practice socially responsible investing (SRI) overwhelmingly believe their policies contribute to better corporate behavior, according to a recent survey.

“The overwhelming majority of those employing SRI policies, by a ratio of nine-to-one, believe these policies improve corporate behavior,” said Bill Crerend, chief executive officer of EACM Advisors, an investment subsidiary of The Bank of New York Mellon Corporation, in a news release on the survey results. In addition, 77% of organizations utilizing socially responsible investing said they plan do continue to do so.

The respondents also showed an interest in applying SRI to alternative strategies, with 28% of those using SRI indicating they are likely to employ it in hedge funds, the release said.

Though convinced their SRI policies improved corporate behavior, respondents were divided regarding the ability of their SRI policies to improve investment returns or to limit their investment risk.

The SRI investors by more than two-to-one indicated they use avoidance screening to choose socially responsible companies in which to invest, the survey found. The respondents singled out tobacco companies followed by pornography and adult entertainment companies as the top two categories to avoid.  

Organizations that utilize positive screening in their SRI strategies indicated their top two types of investments were stocks of companies with good human rights records followed closely by stocks of companies with good environmental policies.

The survey was conducted in October and analyzed the results of more than 200 respondents from foundations, endowments, and non-tax-exempt organizations.