An interesting review of the run-up to the sub-prime mortgage meltdown shows that SR investors started considering the implications of sub-prime business exposure back in 1999 and a number of institutional SR investors adjusted portfolio exposure accordingly. It shows that investors who take a broader view of business (social and environment as well as economic) have a built in capacity to screen for off-screen risks. While they may not know who will be the next Enron or Countrywide Financial or Northern Rock, they are more likely to have lower exposure to sectors or companies with unrecognised dangerous risk profiles.
See the analysis by Social Funds here.
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