Does Social Investing Generate Higher Returns?
by Denys Glushkov and Meir Statman
Editor’s note: This is based on the authors’ article, “The Wages of Social Responsibility,” copyright 2009, CFA Institute. Reproduced and republished from the Financial Analysts Journal, Volume 65, Number 4, with permission from the CFA Institute. All rights reserved.
Socially responsible investments have attracted much money, many investors, and many studies. We have studies of socially responsible mutual funds, socially responsible indexes, “sin” stocks, stocks with good and bad environmental records, and stocks with good and bad employee relations. But some parts of our knowledge are inconsistent with other parts and some gaps in our knowledge remain.
The Social Investment Forum, a national nonprofit organization promoting the concept, practice, and growth of socially responsible investing, describes socially responsible investing as “an investment process that considers the social and environmental consequences of investments, both positive and negative, within the context of rigorous financial analysis.”
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Meir Statman is a Glenn Klimek professor of finance at Santa Clara University, Santa Clara, California.