Statman, Meir. "Values and Wealth in Socially Responsible Investing." Presentation to the Value of Values conference, Santa Clara University, May 14, 2010.
Presentation slides here.


(Rough notes by Lloyd Kurtz, I apologize for inaccuracies or errors of emphasis. - lk)

Statman has frequently defended social investors to their critics, but used this occasion to confront practitioners on several fronts. I counted seven distinct arguments, although there may have been more...!
  • Active management fees are wasted. Since most social investors are active managers, they are participating in a significant waste of resources (see this article from Fama) that could be redirected for better purposes. Since Sharpe has warned that indexing won’t work if too many people do it, I asked Meir where he thought that point was. He said something like: “If everyone eats right and exercises, doctors will lose business – I say let’s try that and see what happens.”
  • Statman warns that the competitive returns we have seen in social investment performance may not persist. He thinks boycott effects (e.g., tobacco stock performance) will be long-lasting, while positive effects (e.g., positive employee relations) could gradually be arbitraged away.
  • I am paraphrasing, but he seemed to say that the social investment industry advertises impact (social change) but delivers palatability (portfolios of inoffensive securities).
  • Given the above, he cited a Jewish tradition which places the highest value on giving a lot anonymously, and the least on giving a little and bragging about it. Since social portfolios don’t deliver much impact (he argues), but are advertised heavily, they are closer to the latter category.
  • He criticized social investors’ emphasis on the size of the industry (“one dollar in ten or one dollar in eleven – who cares!?”).
  • As the industry grows it risks losing its original ideals and animating spirit.
  • Implicit in his remarks was an argument that charitable gifts have greater social impact that any form of social investing, a point many social investors would be happy to debate.