SRI Notes

Good News, Bad News

Here is an interesting chart.  The KLD Social Select ETF (ticker "KLD"), which launched last year, is so far performing exactly as it is supposed to.  The benchmark it is based on, the KLD Select Social Index, is designed to closely mirror the performance of the Russell 1000, while maximizing exposure to companies with strong social and environmental records.

This chart shows that the KLD ETF has had performance virtually identical to an ETF designed to mirror the Russell 1000 (the iShares Russell 1000 Index, ticker "IWB").

The bad news, if you believe social responsibility pays, is that there's no outperformance so far.  Over time the performance of this product will be an important test of whether markets fully understand the positive financial benefits of corporate social responsibility.  So far, anyway, it looks like they do.

Some Reports on CSR and SRI

Here are a few recent reports on corporate social responsibility that I haven't had time to go through yet - just wanted to get all the links in one place...

The biggest recent news, of course, is the Social Investment Forum's Trends Report, which came out January 26th.  This report gives a sense of how much money is manged according to social constraints in the U.S.

In October 2005, the international law firm Freshfields Bruckhaus Deringer issued a report for the UN Environment Programme (UNEP) Finance Initiative entitled "A legal framework for the integration of environmental, social, and governance issues into institutional investment".  It reviews the legal basis for social investing in the U.S., Canada, Japan, and western Europe.  (Thanks to Glynn Washington at the Council for Responsible Public Investment for telling me about this one.)  You can find a copy of the report here.

McKinsey and Company's nonprofit practice has had a series of recent articles on social responsibility, including one on the UN Global compact.  You can review the whole list here (registration required).

Last June KPMG issued its International Survey of Corporate Responsibility Reporting.  You can download a copy here.  The Christian Science Monitor did a good article on it, here.

Jeff MacDonagh posted on this last fall, but here is a link to the PriceWaterhouseCoopers study of analysts' estimates and CSR information.