Social Responsibility and Institutional Investment

Abstract

Traditional research pertaining to the social screening of portfolio firms has rarely gone beyond a description of its conceptual underpinnings. This empirical investigation looks at the real-life practice of implementing an environmental screen and yields a number of interesting observations regarding the environmental screening decision processes of socially responsible mutual funds in the United States. Employing a taxonomy of corporate social responsibility concepts developed via a recent survey of socially responsible mutual funds in the United States, a content analysis-based portfolio screening model was developed that successfully mimicked the environmental screening decisions made by six funds. The model correctly predicted 90% of a combined total of 50 environmental screening decisions for funds whose combined net assets represented over 50% of the total industrywide assets invested as of August 30, 1997.