Socially Responsible Investing

By Karen Saley, Extension Specialist

Whether you call it green investing, sustainable investing, or socially responsible investing (SRI) they all mean basically the same thing. Investors are beginning to take a look at companies that not only make money, but make positive contributions to society and/or the environment.

For a long time investors didn’t really reflect on the long term effects of company business, but today some are starting to consider whether or not they want their money supporting such industries as weapons, tobacco, gambling, and alcohol, just to name a few. Also business practices may be taken into account such as whether or not fair wages are being paid and if diversity exists in the workplace. Lastly, investors may also consider what the environmental impact is to produce the good or service.

The term “socially responsible” can have many different meanings to that end; a couple of different screening processes have been developed to help investors make a decision about which companies to invest in.

Negative Screening
The original focus of SRIs was to avoid investments in companies engaged in undesirable activities. Therefore companies were included or excluded from consideration depending on the types of negative activities they were involved in.

Positive Screening
Positive screening grew out of the negative screening process. Some investors began to realize they could actively seek out and include companies with desirable characteristics in their portfolios, rather than simply avoiding companies that were not living up to their expectations.

So the next time you are looking at businesses to invest in, you may want to consider choosing a company that will not only be of benefit economically, but socially and environmentally as well.


Posted: June 21, 2010

Category: Work & Life

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