November 2014: Socially Responsible Investing.

Socially responsible investing has emerged as a popular and viable alternative to traditional financial products and investing strategies. Historically known as ESG (environmental, social and governance) investing, this investment discipline screens companies based on “environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact” and seeks to incorporate them into the investing process. Investors today are confronted with a variety of catchphrases to encapsulate this principle, such as “sustainable investing,” “socially conscious investing,” “impact investing,” “values-based investing,” and more. For consistency, we used “socially responsible investing” (SRI) in this report.

Traditionally, SRI was grounded within the asset management industry, however, SRI funds and investing strategies are coming into the mainstream. This Broker Monitor report is a first look at how some of the largest players in the U.S. brokerage industry are positioning SRI to their retail investors.

We reviewed the following resources centered on SRI provided by the firms in our coverage group. We also reached out to advisors for additional information:

  •   Marketing resources
  •   Educational resources
  •   Commentaries

Although SRI is an emerging trend, we found that less than half of all firms (44%) in our coverage group address the topic in any appreciable manner. The majority of retail brokers in our coverage group do not offer any information or educational resources to help investors understand SRI, nor do they offer tools to screen for securities that meet SRI criteria.

Additional key findings include:

  • Few discount brokers offer any concentrated marketing content or promotional or educational resources around socially responsible investing and products. Only three firms in our coverage group offer appreciable content on SRI products and investing strategies.

Seven firms in our coverage group offer either a mutual fund or ETF screener (or both) that includes a filter to search for a “socially conscious” product.