What are the disadvantages of ESG investing? Some of the challenges are as follows: Not all ESG factors are easily quantifiable, and such factors may not directly translate into earnings growth or enhanced performance for the firm. Current corporate sustainability disclosures are heavily skewed towards process and procedures and not towards actual performance.
Does SRI hurt investment returns? A 2019 study by a major Canadian financial institution* concluded that SRI does not result in lower returns. The study assessed the results of a comparison of SRI returns and the returns of four other groups: index comparison, mutual fund comparison, hypothetical portfolios, and company performance.
What are the benefits of socially responsible investing?
- It improves risk management: Responsible investing can reduce exposure to risks that may not be visible on a company’s financial statements.
- It enhances long-term financial performance: This kind of impact investment can also lead to better long-term financial performance.
Is socially responsible investing worth it? But socially responsible investing, or SRI, is more attainable and profitable than ever. Once considered a fairly radical strategy, SRI has increasingly gained in popularity. According to a 2019 Morgan Stanley survey, 85% of individual investors are interested in sustainable investing, up from 75% in 2017.