Measurement of Assets’ Social Responsibility Degree

As we have seen in Chap. 3, one of the critical issues in SRI analysis is how to measure social responsibility levels of financial assets. Frequently, there is available disaggregated information on SRI strengths and concerns of assets from each socially responsible criterion. This information is usually provided by independent institutions like rating agencies. Most of the times the available data are presented in a disaggregated way and the individual investor has not got an aggregated indicator of the Social Responsibility Degree (SRD) of each asset. This indicator can be constructed in a subjective or objective way depending on the needs of each investor. In this chapter, we review the current practice and the most widely used methods in the academic literature mainly based on subjective approaches. In these approaches the aggregation weights depend on opinions and preferences of particular analysts, fund managers or investors.