Monday, November 12, 2012

Globe story provokes backlash in SRI community

A Globe & Mail story suggesting that socially responsible investing is not the best approach to building a sound investment portfolio produced a strong reaction among the SRI community, with advocates accusing the Globe writer of failing to do his homework on the subject.

“The problem with SRI is that you limit your universe of stocks,” said Globe writer David Berman in the controversial article. “And this limit simply cannot do a better job of building wealth.”

Berman went on to argue that there are better things to do with your money, such as giving it away to a good cause.

“As Vice President NEI Ethical Funds & ESG Services, I read this story with great interest and disappointment. I believe you have completely missed the mark with your take on socially responsible investing,” said Ethical Funds’ Bob Walker.

Walker noted that the NEI Ethical Global Dividend Fund and the NEI Special Equity Fund are both four star Morningstar rated funds, and as at October 31, 2012, the NEI Ethical Global Dividend Fund is first quartile in all time periods. “So comparing the performance of SRIs to charitable giving is a woefully inaccurate position to take.”

“The proof is out there -- evidence shows that socially responsible companies do better in the long run,” Walker added

“There is a great deal of research confirming that investors do not have to compromise returns when aligning their investments with their values,” said Ian Bragg, associate director of research and policy at the Social Investment Organization. “In fact, we recently published an article showing that socially responsible investing mutual funds perform strongly relative to their peers in virtually all major asset classes.”

"As a social investment financial advisor, I find Mr. Berman's article is totally lacking in research," said Ross Campbell. "Ian Bragg of the Social Investment Organization has done extensive research comparing social value/ethical funds with mainstream mutual funds and has found in almost all categories that the mutual funds that had social screens and used ESG criteria outperformed mainstream funds. Mr. Berman might want to check with Ian Bragg before he writes his next article on social investing."

There are dozens more comments on the article on the Globe website, many in support of SRI. It's heartening to see the community coming together to debunk common myths about SRI.

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