A new three-part analysis of socially responsible investing has been developed by Peter Kinder of KLD Research & Analytics, who puts it forth in a recently released paper, "SRI: An Evolving Concept in a Changing World." "The emerging influence of institutions," Kinder argues, "has forced a re-think of a field known as socially responsible investing. This change will have a lasting effect on the role of institutions as investors and on the importance of SRI."
Kinder suggests the field already has changed substantially, and there now are three distinct approaches to SRI: value-based, value-seeking, and value-enhanced strategies. In the latter two, the recent entrants avoid the label of "SRI."
Value-based SRI, the original form of SRI, is about investors seeking to align their portfolio holdings with their beliefs.
Value-seeking SRI, developed in the late 1990s, seeks to identify social and environmental criteria that may affect financial performance and therefore share price.
Value-enhancing SRI is about using shareholder activism to maintain and increase the value of one's investment, and its focus is almost exclusively on corporate governance.
See full Paper, in pdf format.
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