Does Socially Responsible Investing Perform Better in America Than in Europe?

A blog about business, finance, and economics.
Sept. 14 2010 12:10 PM

Does Socially Responsible Investing Perform Better in America Than in Europe?

The question has plagued socially responsible investing (SRI) since its inception in the early 1970s: Will investors earn a lower return if they put their money only into companies that—fill in the blanks—don't harm the environment, don't take military contracts, don't discriminate in the workplace, etc.?

For quite some time, the consensus among serious financial types was that SRI would lose money; then, it was that SRI at best performed about as well a stock-index fund. The SRI trade group Social Investment Forum trumpets (PDF) claims that a survey of 160 SRI funds found that 65 percent of them outperformed the market in 2009. But a paper published this week in France (PDF) found that from the period 2002-09, French SRI funds performed slightly worse than the market but not at a level that is statistically significant. Moreover, it found that "SRI funds provided no protection from market downturns during this period, as illustrated by the considerable increase of extreme risks borne by these funds."


Who's right? It's tempting to think that the difference is in the nationality, but actually a lot of the discrepancy probably has to do with the time frame. If you look closely at the Social Investment Forum numbers, you'll see some numbers the group does not want to highlight. Namely, that in a five-year time frame, the percentage of SRI mid-cap funds that beat the benchmark was zero; the percentage of SRI small-cap funds that beat the benchmark was zero; and the percentage of SRI balanced funds that beat the benchmark was zero. The French appear to have a point.



More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

What Charles Barkley Gets Wrong About Corporal Punishment and Black Culture

Why Greenland’s “Dark Snow” Should Worry You

If You’re Outraged by the NFL, Follow This Satirical Blowhard on Twitter

The Best Way to Organize Your Fridge


The GOP’s Focus on Fake Problems

Why candidates like Scott Walker are building campaigns on drug tests for the poor and voter ID laws.

Sports Nut

Giving Up on Goodell

How the NFL lost the trust of its most loyal reporters.

Is It Worth Paying Full Price for the iPhone 6 to Keep Your Unlimited Data Plan? We Crunch the Numbers.

Farewell! Emily Bazelon on What She Will Miss About Slate.

  News & Politics
Sept. 16 2014 7:03 PM Kansas Secretary of State Loses Battle to Protect Senator From Tough Race
Sept. 16 2014 4:16 PM The iPhone 6 Marks a Fresh Chance for Wireless Carriers to Kill Your Unlimited Data
The Eye
Sept. 16 2014 12:20 PM These Outdoor Cat Shelters Have More Style Than the Average Home
  Double X
The XX Factor
Sept. 15 2014 3:31 PM My Year As an Abortion Doula
  Slate Plus
Slate Plus Video
Sept. 16 2014 2:06 PM A Farewell From Emily Bazelon The former senior editor talks about her very first Slate pitch and says goodbye to the magazine.
Brow Beat
Sept. 16 2014 8:43 PM This 17-Minute Tribute to David Fincher Is the Perfect Preparation for Gone Girl
Future Tense
Sept. 16 2014 6:40 PM This iPhone 6 Feature Will Change Weather Forecasting
  Health & Science
Sept. 16 2014 4:09 PM It’s All Connected What links creativity, conspiracy theories, and delusions? A phenomenon called apophenia.
Sports Nut
Sept. 15 2014 9:05 PM Giving Up on Goodell How the NFL lost the trust of its most loyal reporters.