Responsible Investing

Once a niche activity at the periphery of capital markets, responsible investment is now becoming mainstream and large financial institutions are incorporating extra-financial criteria in their investment process. According to the definition of the European Sustainable Investment Forum (EUROSIF), “responsible investors take into consideration the long-term influence of extra financial factors such as environmental, social and governance (ESG) issues in their investment and governance decision-making. They integrate ESG factors with traditional financial analysis in their portfolio analysis and engagement activity.”

The growth of this sector in the last decade has been staggering: by 2009, responsible investors managed more than $3 trillion in the United States and $5 trillion in Europe. The number of signatories of the United Nations Principles for Responsible Investment had grown from 100 funds in 2005 to 800 in 2010.

Supported by a five-year grant of the European Research Council (ERC), Prof. Ferraro explores the emergence of responsible investing in mainstream financial markets. The project “The role of technology, models and metrics in the socially responsible investing field” aims to study how institutional investors, asset managers, and the whole financial sector gradually integrates environmental, social and governance factors in their investment process. The project is articulated in a number of studies focused on the design of novel technological and data infrastructure for responsible investing, the emergence of novel investing practices, and finally the role of engagement in the process.

We gratefully acknowledge the financial support from the European Research Council (Project ref:  ERC-2010-StG 263604- SRITECH)