Risks, challenges opportunities

Socially responsible investing (SRI) has undergone a remarkable journey from its faith-based origins in the early part of the 20th century, to a sudden acceleration in the last two decades. It now has over 100 products covering not only asset class, but also geography and global themes such as climate change, water and renewable energy

Despite the growth in SRI funds, a large dose of scepticism persists. The exclusion of companies via negative screening is seen by many critics as an Achilles heel. There is a perception of increased risk by excluding companies involved in “negative” activities such as alcohol and tobacco production, armaments, pornography and gambling. The natural mid- and small-cap bias for SRI funds combined with the inability to invest in defensive sectors such as defence, tobacco and alcohol during financial downturns are oft cited risk factors. This in turn has arguably led to the biggest cha...