The 2006 “Attitudes Toward Socially Responsible Investing” Survey
55% of Investors Think SRI Mutual Funds Help Keep Companies Honest and Products Safer
Most American investors think that socially responsible mutual funds (SRI) contribute to better corporate behavior by keeping companies more honest and influencing them to make safer products, according to a major new investor survey conducted by Calvert. And, for the first time since Calvert has been gauging the views of investors, the survey shows that 54% of conventional mutual fund investors are interested in putting their money in SRI funds.
The Calvert survey shows that 55% of Americans believe it?s extremely or very important that SRI mutual funds influence corporations to act more responsibly. Are SRI successful in achieving this? Survey respondents indicate that SRI mutual funds contribute the most to product safety (66%), corporate honesty (60%), environmental safety (59%), generating fairer wages for employees (55%); reducing sweat shop labor conditions in Third World countries (52%); and making it more likely that women and minorities will be hired and promoted (both at 51%).
Knowing that a company is rated higher in terms of their social performance would make 71% of Americans more likely to invest in that company and 77% of Americans would purchase more of their products and services.
55% of respondents say they strongly/somewhat agree that socially responsible companies carry less risk, and 52% agree that they deliver better returns.
The use of financial advisers has increased over the past six years. Only 24% of investors report investing entirely on their own in 2005, down from 31% in 2002 and 36% in 1999. 86% of investors that use a financial advisor and oriented towards SRI think their financial advisor should know about their interest in socially responsible investing.
U.S. Mutual Funds Investors “Completely at Odds” with Fund Managers on Handling of Global Warming
Seven out of 10 U.S. mutual fund investors now want their mutual funds to support global warming shareholder resolutions, but not one of the nation’s largest mutual funds voted in favor of any climate change proxy measures during 2005, according to a major new public opinion survey from the Civil Society Institute (CSI) and a report prepared for the Ceres investor coalition.
The new Ceres report shows that while many of the nation’s institutional investors routinely support global warming resolutions, none of the nation’s 100 biggest mutual funds — including those managed by Fidelity, Vanguard and American Funds — supported any of the 33 global warming resolutions filed with US companies in 2005. However, the new CSI survey shows that a clear of majority U.S. mutual fund investors want their mutual fund managers to vote in favor of the global warming resolutions and also to actively screen companies linked to climate change woes.
None of the 31 major investment management companies routinely support shareholder proposals seeking more corporate disclosure on climate change. In fact, 28 of them have proxy voting policies that require them to oppose or abstain on all environmental-related resolutions, including climate change resolutions. Among those 28 are mutual fund giants, Fidelity, Vanguard and American Funds, which collectively manage 70% of the assets held in the top 100 mutual funds.
Civil Society Institute President Pam Solo said: “Mutual fund investors and their funds are completely at odds today on the topic of global warming?. The fact that mutual funds are ‘missing in action’ on climate change is an unacceptable situation that investors should insist on changing.”
Co-op America has unveiled a Web-based action campaign where mutual fund investors can urge Fidelity, Vanguard and American Funds, which collectively manage over $1 trillion in assets to start voting in favor of global warming proxy resolutions.
Key Survey Findings
* Three out of four mutual fund investors want their “mutual fund to ask questions about the potential impact of global warming on the companies in which they are investing your money.”
* 71% of mutual fund shareholders say “yes” when asked: “Many investors are filing shareholder resolutions with companies requesting that company management pay closer attention to global warming concerns and problems. Do you think your mutual fund should support these resolutions on your behalf?”
* Roughly 70% of mutual fund investors say they would not “invest directly in a company that is a major source of pollution linked to global warming, whether from its operations or the products it produces.”
The results come as global warming shareholder resolutions have received record high voting supporting from investors in 2004 and 2005, including 28% shareholder support for a resolution filed last year with ExxonMobil asking the company to disclose the impacts of the Kyoto Protocol on its business. It was the highest vote ever on a climate resolution filed at ExxonMobil. Three of the nation’s largest public pension funds, which collectively manage over $400 billion in assets and the largest private pension fund, TIAA-CREF, all routinely supported global warming resolutions in 2005.
Doug Cogan, deputy director of social issues at IRRC, said: “This report finds that virtually none of the top 100 U.S. equity mutual funds are addressing climate change through affirmative proxy voting policies.”
2005 Report on SRI Trends in the U.S. – Ten Year Review
Every two years the SRI trade association, Social Investment Forum (SIF), releases a report on the scope of the SRI industry in the U.S. Over the ten years since SIF published its first report, SRI assets grew 4% faster than the entire universe of managed assets in the U.S. SRI assets stand at $2.29 trillion as of the end in 2005 ($24.4 trillion for conventional funds).
Nearly one out of every ten dollars under professional management in the U.S. today is involved in socially responsible investing.
Assets in socially screened mutual funds and other pooled products rose to $179 billion in 2005, an 18.5% increase from 2003, and a 15-fold increase since 1995. There are now 201 SRI mutual funds.
With more than $1.5 trillion in assets, socially screened separate accounts managed for individual ($17.3 billion) and institutional clients ($1.49 trillion) constitute the bulk of SRI assets. SRI separate account assets have increased ten-fold from $150 billion in 1995.
Since 2003, institutional client assets have declined as single-issue screening has waned and institutional investors have preferred to use shareholder advocacy to raise issues of concern, for example, through coalitions such as the Investor Network on Climate Risk, a project of Ceres. Additionally, new institutions are beginning to incorporate screening on the environment, repressive regimes (particularly Sudan), and terrorist states, which will be included in future reports.
Shareholder resolutions on social and environmental issues increased 16%, from 299 proposals in 2003 to 348 in 2005. Social resolutions reaching a vote rose over 22%, from 145 in 2003 to 177 in 2005. Institutional investors that fi
led or co-filed resolutions on social or environmental issues controlled nearly $703 billion in assets in 2005, a 57% rise from 2003.
Assets in community investing institutions rose 40% from $14 billion in 2003 to $19.6 billion in 2005. Community investing assets have more than quadrupled from the $4 billion identified a decade ago.
The globalization of socially and environmentally responsible investing continues to advance through a diversity of developments in different regions around the world, from the largest SRI markets in Canada, Europe, Australia and Japan to more sophisticated emerging markets of Latin America, South Africa and the Asia Pacific region.
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Concise definitions of SRI are here (scroll down):
Social Investment Forum: Full trends report – [sorry this link is no longer available]
Ceres-commissioned report, “Unexamined Risk: How Mutual Funds Voted on 2005 Climate Change Shareholder Resolutions: [sorry this link is no longer available]/
FROM The GreenMoney Journal, a SustainableBusiness.com Content Partner.
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