Put Your Money Where Your Heart Is

Socially responsible investing is the practice of investing to achieve both financial gain as well as social good. Socially responsible investing (SRI) is not that new; in reality it’s as old as people and money, for in biblical times, Jewish law guided ethical investment, and seventeenth century Quakers and Methodists, respectively scorned investment in slavery and war.

SRI in the modern era surged in the 1960s and early 1970s when investors with anti-Vietnam war and apartheid sentiments divested holdings in companies supplying the war or doing business in South Africa. The 1980’s and 1990s saw concerned investors deserting companies involved with environmental disasters. Recently, investor disgust has been sparked when irresponsible corporations like Enron bilked shareholders out of millions of dollars.

Critics of socially responsible investing (SRI) contend that it’s a great way to under perform the stock market because it very often excludes potentially profitable sectors such as alcohol, gaming and tobacco, or companies involved in countries with questionable human rights records. On the other hand, altruism alone doesn’t propel this trend; investors want to make money as well. So here is the good news, of the approximate 6,800 mutual funds, there are about 70 that are SRI funds and many of them have consistently topped their benchmarks. Nonetheless, you must always remember that past performance is not indicative of future results. In fact according to a report published by Social Investment Forum, there are $2.71 trillion in total assets under management using one or more of the three core SRI strategies – screening, community investing and shareholder advocacy.

Today, shareholder resolutions on environmental, social and related corporate governance questions – such as CEO compensation – are now enjoying major mainstream acceptance. Many investor’s goals are to invest in a way that is in concert with their core beliefs.

So whatever your passion, there may well be investment opportunities that will keep your money working for the causes you believe in.