ANALYSIS OF SOCIALLY RESPONSIBLE INVESTMENTS (SRI) ON THE BASIS OF GLOBAL 100 RANKING

Abstract

This paper seeks a solution as to how to influence investors’ behavior and their ability to invest responsibly. The aim is to extend the traditional approach to portfolio selection by adding an ethical dimension to risk/return analysis. The first part of this study is a review of different methods of presenting the SRI outperformance – from the matching approach and fund benchmarking to comparison of the performance of the SRI index with the traditional non-screened indices. The second part compares the significance of financial outperformance of companies considered as socially responsible over any other companies on American stock markets. The last section of this paper contains the results of the performance analysis of socially screened companies over the last five years. These results support the hypothesis that social screens help investors to pick financially strong companies that give a favorable risk-expected return relation.