Can you be socially conscious and be a successful investor at the same time? Is it practical to consider the impact a company or an investment product has on society? Socially responsible investing requires a person to do the right thing in their local community (and in the global community), while still making a profit. Many see these conflicting interests as irreconcilable, but there are resources for social conscious investors. Many investment vehicles specifically cater to the needs of people who want to play the market without going against their own conscience.
Socially responsible investing (SRI) is not a modern fad. In the 18th and 19th century Quakers avoided the slave trade on religious grounds. John Wesley (1703-1791), one of the most articulate early adopters of SRI, outlined his basic tenets of social investing in his sermon “The Use of Money”-i.e. not to harm your neighbor through your business practices. In his sermon John Wesley, the founder of Methodism, preached against industries like tanning and chemical production, which can harm the health of workers.
During the 20th century many social and political movements used SRI in the form of boycotts and peaceful demonstrations against companies that pursued racist or sexist business practices, or profited by weapons used in war. As labor unions became more powerful, they used their considerable economic clout to invest pension funds into medical facilities and union-built housing projects.
Resistance to Apartheid
From the 1970s to the early 1990s, many large institutions, in America and around the world, avoided investment in the South African apartheid regime. As more and more horror stories emerged about the oppression of blacks and other non-whites in South Africa, the call for divesting from companies operating in South Africa spread to local governments, cities, states, publicly owned corporations, and large educational institutions. The subsequent pressure became so great that eventually a group of businesses, representing 75% of South African employers, drafted a charter calling for an end to apartheid.
Socially Responsible Investing Resources
To practice socially responsible investing (SRI) in the 21st century, you do not have to join a church or a labor union for guidance and facilitation. There are all sorts of mutual funds, investment clubs, blogs, directories, and micro-loan organizations catering to a variety of social causes and political views.
Here are a few tools to help with your socially responsible investing:
- SocialFunds.com features over 10,000 pages of information on SRI mutual funds, community investments, corporate research, shareowner actions, and daily social investment news.
- Calvert Foundation’s portfolio comprises investment in a diversified mix of high-impact organizations whose missions cover a range of social causes and innovations, including affordable housing, microfinance, Fair Trade coffee, small business development, and the establishment of essential community facilities such as charter schools, daycare centers and rehabilitation clinics.
- The GreenMoney Journal encourages and promotes the awareness of socially and environmentally responsible business, investing and consumer resources in publications and online.
- Ethical Investing is a website dedicated to providing investment resources, including stocks and mutual funds, to those who are looking to make ethical investments. They have a very good article on why you should avoid investing in Monsanto.
- Environmental Investors Network, Inc. Profiles public and private companies with socially responsible technologies, products or services, and mutual funds with SRI holdings for investors, consumers, business entities, and job seekers.
- Portfolio 21 invests in companies designing ecologically superior products, using renewable energy, and developing efficient production methods.
- Winslow Green is widely recognized as a pioneer in the rapidly growing field of green investing.
- Prosper pioneered peer-to-peer lending, which allows people to invest in each other in a way that is socially and financially rewarding.
- Zopa is the world’s first social finance company.
- Modest Needs is an award-winning public charity that works to stop the cycle of poverty before it starts for the low-income workers whom conventional philanthropy has forgotten.