A recent study conducted by the Forum for Sustainable and Responsible Investment (US SIF) reveals that growth in sustainable, responsible and impact (SRI) investing is creating new opportunities for social enterprises, particularly those registered as Benefit Corporations.
The report US Sustainable, Responsible and Impact Investing Trends 2016 found that SRI assets have expanded to $8.72 trillion in the US, a 33 percent increase from 2014. That represents a significant portion of total assets under management.
According to the report, asset managers, including 477 institutional investors, 300 money managers and 1,043 community investing financial institutions, consider environmental, social or corporate governance (ESG) criteria across $8.19 trillion in assets, up 69 percent from two years ago.
Furthermore, the level of support for shareholder proposals advocating ESG-related resolutions has also increased. About one-third of proposals received support from approximately 30 percent of shares voted, since 2013. From 2007 through 2009, that was true for just 17 percent of proposals. Meg Voorhes, director of research at US SIF says that these are encouraging signs for social entrepreneurs.
The number one reason cited by money managers (85%) for this increased interest in impact investing is client demand. Climate change is another key factor, says Voorhes. It affects every portfolio in some way. It is drawing attention to the idea that the environment has to be taken into account.
For social enterprises, it means there is a significant body of investors who are actively looking for companies with policies and products that have an impact on society and the environment. According to Voorhes, the ventures likely to be of particular interest to investors are those registered as Benefit Corporations.
Thirty-one states now have such legislation, with seven in the works, according to the B Lab website. Benefit Corps have in their bylaws that the company can take into account the community, the environment and other considerations, in addition to the financial bottom line.
Source and Image: Forbes