The purpose of this area on SCN is to share ideas and tools that can be used to understand and begin to practice a more sensible, and fun, investment approach. Investing and spending our money has become so complex and abstract that many people no longer feel a personal connection to what their money is actually doing in society.
Socially responsible investing (SRI) is the allocation of financial resources, after the consideration of both economic and social criteria, with the goals of maximizing the potential financial and social returns to both the investor and society at large.
Avoidance screening and
Examples: You want to screen out tobacco, gambling,
nuclear power or weapons.
Long practiced by religious organizations, this is simply avoiding certain industries or practices in your portfolio.
Avoidance screening is usually coordinated through your SRI mutual fund or separate account manager.
Qualitative screening and
analysis. Examples: Domestic and international
practices, environmental practices, and full public
To have a diversified portfolio, sometimes we have to invest in a company that is not perfect but has better qualities than others in their industry.
Qualitative screening is usually coordinated through your SRI mutual fund or separate account manager.
Shareholder dialog and
Examples: Asking a major company to report their EEO
global labor standards to
the public, asking a large media company to not
porn network, or getting a large chain to phase out
unsustainably harvested old-growth and tropical
We are seeing increasing use of this tactic lately by the SRI community to try to get the companies that made it past "2" above to change their ways.
Some big-name companies are taking heed. Recently, shareholder campaigns for tighter supplier oversight have resulted in steps being taken by Nike Inc., Wal-Mart Stores Inc. and Walt Disney Co. Disney, where one shareholder proposal won 43% support, is making sweeping changes to the way it monitors, audits and reports on contractors. Gap Inc. has also started releasing more information on overseas contractors' compliance. Get the latest scoop on what's going on from the Advocacy & Public Policy Program of SIF web site.
Shareholder activism is usually coordinated through your SRI mutual fund or separate account manager.
Example: A young couple was a long-term welfare
They turned to his long time hobby, woodworking for
And, with the help of a small loan from a community
fund, they were able to turn his woodworking into a
that now supports the whole family off welfare. Get
latest scoop on what's going on from the Community
Investing web site.
Investors can now easily make job creation, child care, and affordable housing a portion of their portfolio by investing in professionally-managed community investment notes.
Check out the 1% for community campaign at the above web site.
The Social Investment Forum encourages its members and their clients to fully participate in SRI those four ways.
Most people think that social investing only has to do with avoidance or negative screening. Now you know better. If your money is not participating in each of those four key parts above, you're not really doing all that is possible with social investing.