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Social Impact Ratings: How to Make Responsible Investment Appealing

By Jonathan Wisebrod

Robin Cosgrove Prize for Ethics in Finance, Fall 2007

The investment sector plays a unique role in promoting ethical practices throughout the economy. With well over three trillion dollars invested in socially responsible investments (SRI) worldwide, environmental, social, governance and ethical factors (collectively, 'social impact factors') have a demonstrable impact on investment practices. SRI investors utilize various methods of influencing corporate practice, including social screening of investments, which can ultimately reward positive social impact with greater access to financing.

This paper proposes a method for incorporating social impact factors as a quantitative parameter in investment analysis and a means of facilitating such analysis in practice. These proposals have the potential to integrate social impact factors into quantitative portfolio management techniques that have traditionally been based only on risk and return.

Download: Social Impact Ratings: How to Make Responsible Investment Appealing (PDF, 290.97 K)

Read More: Economy, Environment, Ethics, Finance, Governance, Global

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