No Effect, or No Net Effect? Studies on Socially Responsible Investing

The author reviews the literature on the performance impact of socially responsible investing and focuses on equity portfolios. The key issues addressed are whether social screens have harmed investment performance or whether information effects have offset diversification costs. In other words, the central issues are whether social screening has no effect on performance or no net effect. Based on the studies examined, the author concludes that those portfolio managers wanting to eliminate the active exposures of social screens can do so without incurring material costs.