Performance Characteristics of Social and Traditional Investments

Abstract

Socially responsible investment is a growing movement. The authors ask how we can evaluate social performance. They investigate both the financial and social performance of companies included in socially responsible and traditional investment portfolios. Companies that successfully pass a social screen (screened-in companies) outperform screened-out companies on a variety of social performance measures: employee relations, diversity, product (customer), community relations, environment, non-U. S. operations, and governance. Screened-in and screened-out companies perform about the same financially and in market terms.