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Socially Responsible Investing (SRI)

Posted on | April 10, 2013 | Comments Off

People who are afraid to invest sometimes entertain the thought of just digging a hole in the back yard and buying their cash. Of course this would be financial suicide to do so. Those who have cash in a savings account and are afraid to invest it are doing more harm than good. When you don’t invest this money it can actually decline in value due to inflation over a period of time. You must invest in order for it to grow and gain value and eventually lead to becoming financially independent. So how does one invest money without risking financial suicide or leading to world destruction? Socially responsible investing or SRI.

How Socially Responsible Investing Originated
Socially responsible investing or SRI began during the religious period in the early 1700’s. The Quakers also known as the Religious Society of Friends prohibited anyone from participating in slave trade. During the Wesleyan era John Wesley gave a sermon called “The Use of Money” saying in essence to not harm your neighbor by not investing in chemical production or tanning and to stay away from investing in sinful products such as firearms, tobacco or alcohol.

The SRI Today
SRI even today still avoids alcohol, firearms, gambling, tobacco and the defense industry. However, there is an increase in community rights investing which is investing in communities that are under served and, human rights, you can buy index funds, SRI mutual funds, ETF’s or start your own SRI strategy.

Many people have turned to SRI to focus on environmental issues that focus on global warming and have been doing this in many ways such as :

  • Screening and omitting gas, oil, coal as well as various other fossil fuels.
  • Not investing in companies that do not support the environment
  • Investing in companies that use renewable resources and alternative resources
  • Investing in companies that use renewable and alternative energy.

SRI Is Not Just for Charity
It’s not really known why SRI has become such big business in recent years. According to recent studies SRI based assets have grown by leaps and bounds over non SRI based assets. Even mutual funds that are SRI based have increased by trillions of dollars over non SRI based mutual funds.

This proves that you can become a socially responsible investor without taking any risks. On the other hand even consumers are impacting businesses every time they make a purchase of that company’s products or services. They don’t realize it, however, that every purchase they make is considered socially responsible investing. Consumers take the time to choose products and services based on two factors. The first being the brand the second being the price. So when a major brand is purchased because it’s on sale or at a discount the consumer is making a responsible choice. Other consumers purchase products or services based on the brand name alone. This can impact companies that possibly contribute to less desirable causes such as global warming, overcrowded landfills or human rights issues such as child slave labor.


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