There is no doubt that SRI is becoming increasingly important to investors by and large, especially among younger households. But many are still sitting on the fence, and new findings from Spectrem shed light on why.

Nearly a third of 3,070 affluent investors recently polled by Spectrem Group feel that most companies claiming social responsibility in their corporate behavior is nothing more than a “marketing ploy,” shedding light on why some advisors may find it hard to engage clients on the topic of SRI.

The report, entitled Investor Perceptions of Socially Responsible and Impact Investing, looked at the differences between investors who “care” about socially responsible investing and those who don’t.

When asked to cite their reasons for a lack of interest in socially responsible investments, nearly six in ten (57 per cent) respondents said their investment objectives are “purely financial,” while over a third (35 per cent) admitted that they have never given much thought to the matter and 32 per cent are dubious about corporate promises. 

Spectrem noted that the concept of impact investing, micro-finance and socially responsible investing is “still new for most investors.” When asked to rate their familiarity with various terms on a scale of 0 to 100, for example, respondents rated their knowledge of “impact investing” as a 28.94, the term “micro-finance” as a 31.61, and, at 46.75, were more familiar with the idea of “socially responsible investing.”

These findings and other previous industry research on investor perceptions of socially responsible investing (and similar concepts such as impact investing) seemingly boil down to the same issues: awareness and education.

Despite industry figures pointing to a clear surge in interest among investors to, as it is so often put, “do well while doing good,” Zachary Karabell of Envestnet said at the latest Family Wealth Report Summit that he has observed a “disconnect” between how many people invest their money in a “responsible” way and the values they articulate. Indeed, almost half of those polled by Spectrem don't have any socially responsible investments in their portfolio.

Another recurring industry finding is that younger investors tend to have a larger percentage of their portfolio dedicated to socially responsible investments than their older counterparts.

Attitudes toward investing for social impact are “divergent and strongly held,” said George Walper, president of Spectrem. “Those that are in favor see it as a way to improve the world and increase assets at the same time, while those who are against it simply don’t consider it a meaningful factor in investing.”                      

But as Millennials begin to boost their own wealth, and as Baby Boomers feel more comfortable with their own retirement plans, social responsibility will become increasingly important, Spectrem said.

“Corporations will generally start to be held to higher standards and investors and the media will become increasingly aware of the practices of these companies. Advisors must be articulate about various issues and help investors of the future weigh the benefits of social investing against pure profit.”