Socially Responsible Investment (SRI)

SRI is one of the fastest growing investment trends. Starting with the establishment of specialist ethical and environmental funds in the 1970s and 1980s based on negative screening, SRI strategies have developed in a variety of ways and have been adopted by many leading investment managers, pension funds and other institutional investors. SRI has moved from the fringe to the mainstream.

This process has been driven by increasing concerns over the environmental and social impacts of companies which have raised consumer awareness and fuelled high-profile NGO campaigns. At the same time, there has been a growing understanding of the potential benefits for investment returns of companies adopting higher corporate social responsibility standards as a way of both managing risk and identifying ways of enhancing future performance.

With increasing pressure on both companies and investors to demonstrate that their activities are sustainable, many markets now have regulations requiring disclosure and consideration of social, ethical or environmental issues by investors.

The growth in SRI represents a recognition that traditional financial analysis and investment techniques do not capture the full range of factors of concern to investors and which increasingly affect company performance.

The agenda of SRI issues is constantly changing as the market develops, and as our understanding of how to achieve sustainability evolves. For example, the concept of stakeholder accountability and engagement has quickly become a key theme for socially responsible investors. Equally, the types of performance metrics that can be used to report on corporate social performance are undergoing rapid development.

SiRi Company's unique business model, global reach and wealth of specialist experience enables us to track market developments globally and identify SRI investment issues to create innovative solutions for our clients.In order to provide SRI products for their clients and customers, institutional investors need research of the highest quality that deepens understanding of a company's operations and enhances the quality of investment decision-making.

SRI research can be used for a variety of purposes, but is primarily used to identify:

• company activities that are unacceptable to clients for the purpose of portfolio screening
• deficient CSR practices that expose companies to reputational or other risks,
• favourable commercial positioning in relation to future market or political developments,
• companies with higher standards of social and environmental performance relative to their sector or index
• issues where investors can have an influence on company behaviour through engagement strategies

As the SRI market has grown, more varied and sophisticated investment strategies have been developed that seek to integrate social and environmental concerns into conventional financial analysis. SRI is now applied to the full range of retail investment products. For institutions, SRI as a stock selection tool is being augmented by shareholder engagement strategies, both by individual institutions and by coalitions of investors with common concerns.

But whatever strategy is adopted, institutional investors need a basis of in-depth, independent analysis that adds value to their own understanding of companies. This is SiRi Company's core strength. By working with a wide variety of institutional investors, we have developed an unrivalled knowledge of the needs of investors, of SRI research methodologies and of corporate activities.