Socially Responsible Investing (SRI) enjoys a large consensus and is often presented as being able to conciliate finance and sustainable development. Actually, the SRI market share stays low (slightly more than 10%), not to say very low if we consider only “Core SRI” (very few percent). Its growth is relatively high in Europe, but its market share is stagnating in the US. Accordingly, for now, SRI does not have a significant impact on firms’ cost of capital. Additionally, a careful review of the academic literature shows clearly that the financial performances of SRI funds are neither better –nor worse– than those of traditional mutual funds.Doing well by doing good: the intention is undoubtedly admirable. However, it could lead to wishful thinking and blindness to unintended consequences. In this article, we shall warn against two pitfalls: first, attempting to overly inflate the SRI market may lead to a weakening of the concept and to the development of greenwashing; second, claiming that SRI outperforms opens the door to lobbies that will certainly use the argument to defend self-regulation. SRI must not be used as a substitute for regulation.
