The ups and downs of the markets over the last two years haven’t greatly impacted socially responsible investments, according to a study released today by the Social Investment Organization (SIO). In fact, the study, called the Canadian Socially Responsible Investment Review, found that SRI assets increased 21% to $609 billion from 2006 to 2008.

“Socially responsible investors have maintained their confidence in SRI over the past two years, and there’s growing interest in finding solutions to global, social and environmental issues through investment,” said Eugene Ellmen, executive director of SIO. “We believe that SRI represents the leading edge of the investment industry and is well-poised to survive the current economic turmoil and come out of it ready for strong growth.”

The growth mainly came from broad SRI assets, which grew to $555 billion from $446 billion over the two-year period. Broad SRI encompasses strategies that integrate environmental, social and governance factors into financial analysis and portfolio management.

The study notes that broad SRI marginally increased in “the number of pension plans and endowments with responsible investment policies, as well as asset growth by pension funds with existing responsible investment policies,” which helped offset a small decline of “asset managers with institutional mandates using environmental, social and governance (ESG) integration strategies.”

Core SRI assets, on the other hand, declined 5.6% to $54 billion. The report attributes the core SRI reduction to general market conditions. But assets from number of managers who employed SRI mandates decreased from $36 billion to $27 billion from 2006 to 2008. Core SRI assets are associated with traditional values-based approaches, and investment strategy is based on screening, community investment, social finance and socially responsible lending. Unlike broad SRI, core SRI takes an ethical position on how ESG factors may have consequences for stakeholders or the environment.

Bright spots in core SRI strategies include retail investment funds, which increased from $18 billion in 2006 to $22 billion last year and socially responsible lending, which is up from $1.9 billion to just over $3 billion.

The market downturn in the latter part of 2008 is not reflected in these numbers, the report notes, but the study’s authors believe “SRI is well-poised to survive the current economic turmoil and come out of it ready for strong growth. In spite of these difficult times, there is evidence that Canadians want their investments to pose solutions to global social and environmental issues, not to simply profit from the status quo.”

Overall SRI market share in Canada hovers around 20%, a marginal increase from 19.5% in 2006.

To download a copy of the full report, visit http://www.socialinvestment.ca/documents/caReview2008.pdf.

(04/30/09)