A Study on SRI & ESG Investing Arpana D. Assistant Professor, Department of MBA, The Oxford College of Business Management, Bangalore, India Online published on 7 November, 2013. Abstract SRI and ESG "screens" are particular ways to determine what you have in your investment portfolio. Socially responsible investing (SRI) is a steadily growing market segment. socially responsible investing is done to fund activities that have a high social utility. It involves evaluating companies on CSR issues, analyzing corporate social and environmental risks, and engaging corporations to improve their CSR policies and practices. More and more investors apply socially responsible screens when building their stock portfolios. This raises the question whether these investors can increase their performance by incorporating such screens into their investment process. SRI fund managers employ several screens at the same time such as tobacco, alcohol, community, employee relations, environment, and diversity. Indian investors are not ready for SRI funds as yet since there is a feeling (even among high net worth investors) that fund managers will compromise on returns for the sake of meeting social objectives. Socially responsible investing also has tax advantage. SRI funds, currently, have $3 trillion in assets across the globe. SRI ratings are a valuable information for investors. A simple trading strategy based on this publicly available information leads to high abnormal returns. This immediately raises the question of where this extra profit stems from. Does it result from a temporary mispricing in the market or does it compensate for an additional risk factor? Answering this question seems to be a promising avenue for future research. Investors who choose to place their money in socially responsible investing product accept that their savings are invested in activities related to activities that help people in difficulty, improving housing of society, protecting the environment or even in international solidarity. Top Keywords Investment portfolio, tax advantage, Socially responsible investing, ESG, Returns. Top |