Socially Responsible Investing

Posted by Krystle On 10/26/2009
Disclaimer: Currently, I am not much of a stock market investor. As a student who is about to graduate from University, the only investing I've been doing for the last few years is "in my future," or so I've been told repeatedly by the bureaucrats who take my tuition cheque every year.

However, I am very interested in the idea of Socially Responsible Investing (SRI). The idea behind SRI is basically the ethical shopper's version of investing. Instead of investing purely in whatever company you think will be the most profitable; you only choose to invest in companies whose ethics you agree with. (This should sound pretty familiar to BrandAware readers and ethical shoppers.) For the most part this means investing in green energy, and new technologies that are promising sustainability.

The question on most investor's minds is: 'Is this still profitable?' Well, the answer is complicated. There are reports that claim SRI is profitable and other that don't. SRI is a slow but growing movement and so there is still a lot of time for SRI-only investment firms to soar or to flop.
According to Zoe Van Schyndel:

"In a paper entitled "Socially Responsible Mutual Funds", published in the May/June 2000 issue of the Financial Analysts Journal, Meir Statman of Santa Clara University reviewed 31 socially screened mutual funds and found that they outperformed their unscreened peers, but not by a statistically significant margin. The bottom line appears to be that SRI funds do not behave all that differently from regular funds and that investing in a SRI fund will not negatively affect your returns compared to choosing a conventional index fund."
Apparently, SRI funds aren't some stock market secret for making millions overnight, but they are a viable investing option. Furthermore, one would have to logically think that the more people get on board with ethical consumerism by boycotting companies they disagree with, the more ethically conscious companies will flourish and the better their stock will do.

If you are interested in SRI investing, there are firms that do specific SRI investing that you can check out.

More Information from Investopedia

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