Exclusion Strategy in Socially Responsible Investment : One Size Does Not Fit All

A better overlap between the exclusion set used by socially responsible investments (SRI) managers and individual preferences could lead to higher adoption of SRI, which is in turn expected to promote a more sustainable development. In the first study, we find an essential mismatch: both the US (n=472) and the UK (n=560) respondents did not adhere to the classification of some of the most commonly excluded sin industries as being sinful. In the second study on US investors (n=1,020), we show that two-thirds of respondents are willing to pay 2.1% of their initial investment to choose which industries should be excluded. In comparison, the rest of the sample is willing to pay 2.5% to have a panel of experts decide for them. These results suggest the need to refine the exclusion strategies used by funds and update the list of industries typically excluded to promote SRI