Socially responsible investing (SRI) spans a wide and growing range of products and investments, from stocks and bonds, to savings, checking and other banking accounts, to venture capital. Like all investors, socially responsible investors seek a competitive financial return on their investments, and the good news is that it is possible to consistently achieve this.

A growing number of academic studies have demonstrated that SRI mutual funds perform competitively with non-SRI funds over time. Several of these peer-reviewed and published studies have been awarded the prestigious Moskowitz Prize. Additionally, more than 20 studies demonstrating that SRI mutual fund performance is comparable to that of non-SRI funds can be found at www.sristudies.org — a compendium of all the major academic studies on SRI.

Another indication of the competitive performance of SRI funds is the performance of SRI indexes. These indexes are designed to be benchmarked to non-SRI indexes, such as the S&P 500. The longest-running SRI index, the Domini 400, was started in 1990. Since that time, it has continued to perform competitively — the S&P 500 with 10.33% total returns, versus the 10.83% return of the Domini 400. For up to date information on the performance of SRI funds that belong to the Social Investment Forum.

The rapid growth of SRI in recent years is the best evidence that socially responsible investing yields competitive returns. Over the past 20 years, the total dollars invested in SRI has grown exponentially, as has the number of institutional, professional, and individual investors involved in the field. Between 1995 and 2007, total dollars under professional management in SRI grew from $639 billion to $2.71 trillion, outpacing the overall market. SRI investing has become part of the mainstream, and as a result, a number of conventional companies now offer SRI products to their clients. The bottom line is that more and more investors adopt and use SRI strategies not only because such investments allow a focus beyond the bottom line, but also because returns are comparable to those of more conventional investments.

Ample evidence of the competitiveness of SRI is also found in the increasing investment in SRI by state pension funds, university endowments, and foundations. These fiduciaries are obligated by law to seek competitive returns for the portfolios they manage. The fact that a growing number of major U.S. fiduciaries are either screening their portfolios, engaging in shareholder advocacy, or directing assets to community investing, demonstrates that these three SRI strategies do not impede financial returns.

According to Eric Borremans, senior fund manager at BNP Paribas Asset Management, the best places to put one’s money these days is water resources, wind power and energy-saving light-emitting diodes – industries now seeing massive investment by governments around the world.

Borremans, the asset manager’s head of sustainable investment, said governments around the world are rolling out new policies to boost green industry, but stressed investors need to be cautious in choosing which companies and specific areas benefit from this new landscape.

“Now is the time to invest in green industries, where global resources will be concentrated,” Borremans said during his latest visit to Seoul. BNP Paribas, a French asset manager, operates a local joint venture called Shinhan-BNP Paribas with Korean financial behemoth Shinhan Financial Group.

As the economic downturn raged, major economies including the United States, Japan and European nations rushed to roll out stimulus packages, and most of them contained support for green growth. Borremans estimated these countries will invest up to $400 billion in green growth industries over the next three to five years.

“It is double the [current] size of the world’s environmentally friendly industries,” he said.

Particularly promising areas are water, wind power and LED lighting, all of which are seeing massive spending by the American government.

The U.S. is aggressively developing wind power resources, as is China, while LED lighting has the potential to improve the energy efficiency of buildings, Borremans said.

But the future of some industries long considered green up-and-comers, such as biofuel and solar power, may not be as bright as once thought, the fund manager said. Biofuel suffers from a worsening reputation amid criticism that its production fans global crop price hikes and food shortages in poor countries, while the solar energy industry is struggling with a supply glut as hundreds of solar panel makers are competing to expand their presence in a market that is still of limited size.

Borremans added that now is also the time to pay more attention to green tech companies in Asia, which suffers from brutal pollution. Demand for technologies to preserve the environment during and after industrialization will come from these Asian countries rather than Western companies.

Borremans, who manages the BNP Paribas funds investing in environmentally friendly companies, sold here as the “Shinhan-BNP Paribas Bonjour Clean World,” said he is currently investing in Taewoong, a local wind power technology company.

Socially responsible investing (SRI) spans a wide and growing range of products and investments, from stocks and bonds, to venture capital. Like all investors, socially responsible investors seek a competitive financial return on their investments, and the good news is that it is possible to consistently achieve this.

Economic Studies Confirm that SRI Outperforms NON-SRI

A growing number of academic studies have demonstrated that SRI mutual funds perform competitively with non-SRI funds over time. Several of these peer-reviewed and published studies have been awarded the prestigious Moskowitz Prize.

Additionally, more than 20 studies demonstrating that SRI mutual fund performance is comparable to that of non-SRI funds can be found at www.sristudies.org — a compendium of all the major academic studies on SRI.

Another indication of the competitive performance of SRI funds is the performance of SRI indexes. These indexes are designed to be benchmarked to non-SRI indexes, such as the S&P 500. The longest-running SRI index, the Domini 400, was started in 1990. Since that time, it has continued to perform competitively — the S&P 500 with 10.33% total returns, versus the 10.83% return of the Domini 400.

Rapid Growth of SRI

The rapid growth of SRI in recent years is the best evidence that socially responsible investing yields competitive returns. Over the past 20 years, the total dollars invested in SRI has grown exponentially, as has the number of institutional, professional, and individual investors involved in the field. Between 1995 and 2007, total dollars under professional management in SRI grew from $639 billion to $2.71 trillion, outpacing the overall market. SRI investing has become part of the mainstream, and as a result, a number of conventional companies now offer SRI products to their clients.

The bottom line is that more and more investors adopt and use SRI strategies not only because such investments allow a focus beyond the bottom line, but also because returns are comparable to those of more conventional investments.

Ample evidence of the competitiveness of SRI is also found in the increasing investment in SRI by state pension funds, university endowments, and foundations. These fiduciaries are obligated by law to seek competitive returns for the portfolios they manage.

The fact that a growing number of major U.S. fiduciaries are either screening their portfolios, engaging in shareholder advocacy, or directing assets to community investing, demonstrates that these three SRI strategies do not impede financial returns.