Corporate Social Responsibility: Should I Invest for
It or against It?

Abstract

In this article, the authors compare the returns of a portfolio composed of socially responsible companies with those of a portfolio composed of companies without that distinction. They find that socially responsible companies perform worse than “irresponsible” companies. The reason for this seems to depend on the individual socially responsible investment (SRI) screens. Some screens have a positive impact on returns, some have a negative impact. Corporate governance is the only SRI screen with a positive relationship to returns: A positive rating helps returns, while a negative rating hurts returns. Most other screens show an inverse relationship: Companies with poor social responsibility have higher returns, or companies with good social responsibility have lower returns.