SRI proponents argue that routinely evaluating ESG criteria-referred to as sustainable investing-helps money managers select high-quality companies that will outperform over the long run. Some studies have supported these arguments, and institutional investors have been faster to embrace this thinking.
But not enough money managers, especially those who manage retail mutual funds, have been using ESG criteria long enough to demonstrate how such stock-picking affects overall long-term investment performance. And while ESG research has gotten much better, it needs to continue to improve, especially when it comes to evaluating the stock of smaller firms.
SIF's 2009 results are encouraging, and the year 2009 may end up being a major turning point in convincing more money managers that ESG performance should be routinely considered. You can see a full table of the results here: http://www.socialinvest.org/resources/factsheets_resources/documents/123109SIFFundPerformance.pdf.