One argument against socially-responsible investing in banks is that it can lead to what outcome?

The argument that socially-responsible investing (SRI) in banks may lead to decreased revenue and profit stems from the perception that such investing can limit the banks' operational flexibility and growth prospects. When banks focus on socially responsible initiatives, they might forego investment opportunities in certain sectors that are deemed harmful to society, such as fossil fuels or tobacco. This could lead to a reduced overall market for their services, particularly in industries that are not aligned with socially-responsible criteria.

Furthermore, adopting a socially responsible approach may entail higher upfront costs for implementing sustainable practices or ensuring ethical compliance. If these costs are not effectively managed, they can undermine profitability. Investors seeking immediate financial returns may see the prioritization of social responsibility as a detriment to the bank's bottom line, leading to potential concerns about the sustainability of profits over time.

In contrast, options relating to increased employee turnover, higher operational costs, or enhanced customer loyalty can often be seen as potential side effects of committed SRI efforts, but they do not directly address the primary financial concern raised by critics of socially responsible investing. Hence, the impact on revenue and profit becomes a central point of contention in arguments against SRI in banking.