Sustainable, responsible and impact (SRI) investing is an investment discipline that considers environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive social impact. SRI may not seem fully mainstream, but it is quickly gaining momentum among investors, advisors, and fund managers. In 2015, the Morgan Stanley Institute of Sustainable Investing found that 71% of individual investors are interested in sustainable investing[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][1]. Millennial and female investors are on the leading edge of adoption and are most likely to factor sustainability into their investment decisions. According to the Forum for Sustainable and Responsible Investment, at least $7 Trillion is currently invested in environmental, social and corporate growth strategies, up from $3.7 Trillion in 2012.


Several factors motivate investors considering SRI investing. These include personal goals, values and commitment to advance social, environmental and governmental practices. Some investors embrace SRI to manage risk and to assess the quality of management and the likely resilience of their portfolio companies in dealing with future challenges. Some are seeking financial outperformance over the long term. In fact, a growing body of academic research shows a strong link between ESG and financial performance[2].

SRI spans a range of financial instruments such as stocks, mutual funds, fixed income and alternative investments. Mutual funds are one of the fastest growing investment segments within the ESG investing space, though alternative investments and community investments have also seen dramatic growth over the past few years. In May of 2016, Morningstar started scoring 20,000 funds based on ESG metrics to give investors and advisors a way to calibrate performance in these areas[3].

Investment performance based on ESG criteria has received much attention. Research has shown that companies with strong corporate social responsibility policies and practices may potentially be sound investments. In 2015 Deutsche Asset & Wealth Management and Hamburg University conducted a meta-analysis of over 2,000 empirical studies, making it the most comprehensive review of academic research on this topic. They found that the majority of studies show a positive correlation between ESG standards and corporate financial performance.[4]  Additionally, in 2014, a report by the University of Oxford and Arabesque Partners analyzed about 200 studies to assess how sustainable corporate practices can affect investment returns. It concluded that “88% of the research shows that solid ESG practices result in better operational performance of firms and 80% of the studies show that stock price performance of companies is positively influenced by good sustainability practices.”[5]

Challenges that face the evolving practice of ESG investing include lack of long-term performance data, measurement and integration across asset classes. However, investors are sending clear signals that demonstrate their interest in integrating sustainability into their investment decisions, and underscore their belief that SRI investing will become an even more widespread discipline. SRI strategies may be appropriate for certain investors and should be considered carefully to ensure that long-term financial goals and objectives are upheld. At Callan Capital, we develop mission-driven investment strategies for clients who want to combine social responsibility and sustainable values with investment returns.

Disclaimer: Callan Capital does not provide individual tax or legal advice, nor does it provide financing services. Clients should review planned financial transactions and wealth transfer strategies with their own tax and legal advisors. Callan Capital outsources to lending and financial institutions that directly provide our clients with, securities based financing, residential and commercial financing and cash management services. For more information, please refer to our most recent Form ADV Part 2A which may be found at

[1] Sustainable Signals: The Individual Investor Perspective, Morgan Stanley Institute for Sustainable Investing.




[5] Environmental, Social and Governance Issues in Investing: A Guide for Investment Professionals, CFA Institute.