In the past some have argued an ethical approach could result in less than stellar performance. Many funds also do not have track record, so the longer term past performance can suffer in comparison to peers.
But Jamie Sutton, director of Premier, says SRI investors can expect medium to long term attractive financial returns, while making substantial ethical contributions to society.
In June 2012 Deutsche Bank reviewed more than 100 academic studies and 56 research papers and concluded that ESG factors do have positive financial impacts in a number of cases.
Peter Michaelis, head of equities at Alliance Trust and head of sustainable and responsible investment at Alliance Trust Investments, says companies that make a positive contribution to the world and society are inherently in a better position to prosper than those that do not.
When undervalued, Mr Michaelis argues the kind companies that make a positive contribution to the world and society provide better investment opportunities than pure profit chasers who ignore potential environmental or social costs.
He says there are three key elements, which Alliance Trust looks at when assessing SRI investment opportunities: positive impact, avoiding negatives and real investment potential.
Positive impact means focusing on companies that are a real force for good, whether that is improving quality of life, reducing environmental impact or managing operations responsibly and with integrity.
Avoiding negatives means not investing in companies whose activities damage the environment or have a negative social impact.
Finally, real investment potential, which Mr Michaelis says is about companies operating in a sustainable and responsible manner that his managers believe are better placed to succeed over the long term.
