Socially responsible investing: Doing well by doing good

Lynn Russo Whylly's picture

On one hand, investment committees are stewards of long-term asset pools and have a principal responsibility to maximize investment performance subject to the risk tolerances that they have identified in their investment policy statements. The conventional wisdom intuits that anything that tends to limit investment options has two potential problems—one, lower performance and, two, higher risk.

Conventional wisdom may not be accurate, however, when it comes to ESG. This article will address the issues in three ways: first, by seeking to facilitate conversation among investment committees by setting forth some basic definitions and background; second, by looking at the obstacles that may be standing in the way of greater adoption of ESG principles and practices, including trends in responsible investing; and, third, by offering some practical ideas about implementing an ESG program at your institution.

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