Social Issues and Socially Responsible Investment Behavior: A Preliminary Empirical Investigation

TLDR

The rise of corporate social responsibility includes individual and institutional investors seeking socially responsible companies, yet research has focused only on institutions, leaving individual investor criteria unexplored. The study surveyed 4,000 investors in two socially screened mutual funds, revealing that socially responsible investors tend to be younger and better educated. The survey found that socially responsible investors are younger and better educated, prioritize environmental and labor relations issues, yet are unwilling to sacrifice financial returns for social goals.

Abstract

An important dimension of the ongoing trend toward greater corporate social responsibility is the emergence of individual and institutional investors who invest in companies that support social objectives. While a small number of studies have examined the criteria used by institutions, no studies have looked at individual investors. Using a mail survey of 4,000 investors in two mutual funds that incorporate social screens in their investment decisions, this study finds that compared with other investors, socially responsible investors are younger and better educated. Respondents most frequently identify environmental and labor relations issues when asked what defines socially responsible corporate behavior. Although the respondents value socially responsible behavior in companies they invest in, they are unwilling to sacrifice financial returns to achieve it.