Socially Responsible Investing
SRI, or socially responsible investing, discourages investors from buying stocks in publicly-held or private enterprises which manufacture or promote products or services that endanger human or animal rights or the environment. According to the history, the rudiments of SRI, were first enacted by religious groups, such as the Quakers, in the early 1800s. The first religious sect to object to investing money into the slave trade, the Quakers viewed slavery as a violation of human rights. The Civil War of the 1860s was actually a fight between wealthy southern slave owners, who depended on African immigrants to tend the cotton fields, and northern abolitionists who abhorred the practice of enslaving human beings for monetary gain.
As society developed, other socially-conscious and religiously motivated groups banned the financially support of manufacturers of alcohol, tobacco, and firearms, products which encouraged vice. Perhaps, most notable were the days of Prohibition during what was termed, "the Roaring 20s," when federal agents waged war against organized crime moguls who threatened to derail the moral fiber of America with illegal alcohol, drugs, gambling, and prostitution, which enslaved men and women in immorality. Socially responsible investing meant taking a stance against vice and the lords who ruled the underworld of organized crime. "Know ye not that the unrighteous shall not inherit the kingdom of God? Be not deceived: neither fornicators, nor idolaters, nor adulterers, nor effeminate, nor abusers of themselves with mankind, Nor thieves, nor covetous, nor drunkards, nor revilers, nor extortioners, shall inherit the kingdom of God. And such were some of you but ye are washed, but ye are sanctified, but ye are justified in the name of the Lord Jesus, and by the Spirit of our God" (I Corinthians 6:9-11).
Over eight decades after the Quakers publicly renounced slavery, the Civil Rights movement of the 1960s brought social consciousness to the forefront of the American public, as minorities and human rights advocates conducted sit-ins at lunch counters and boycotted businesses in Montgomery, Alabama, under the leadership of the late Reverend Dr. Martin Luther King, Jr. At the same time, advocates for socially responsible investing not only supported civil rights for racial minorities, but also for women and workers who were treated unfairly. As a result of such consciousness, labor unions, pension funds, and public housing projects became key projects for corporate investors who wanted to put money into enhancing the lives of working Americans all over the nation.
Over the years, proponents of SRI have taken to the streets to protest buying shares of stock in South Africa diamond mines, which practiced modern-day slavery by employing poor Black South Africans in deplorable working conditions for paltry wages. Companies around the world began to pull financial backing from South African enterprises which practiced apartheid, an inequitable separation of people based solely on race. The pressure applied to these businesses contributed toward ending apartheid and freeing an oppressed indigenous people. Other positive outcomes have resulted from individuals and corporations around the world joining together to promote socially responsible investing and to condemn the violation of human rights, especially in underprivileged countries. SRI proponents have worked incessantly to address product and job safety issues, fight for reasonable wages, and improve the conditions under which indigenous people must work.
In the last decade, the focus for socially responsible investing has shifted somewhat from human rights to protecting and preserving the environment. A concern about global warming and its effects on the integrity of the ecosystem around the world have caused corporations and conglomerates to invest in green industries, new biotechnologies, and alternative fuels which can help offset the devastating effects of green gas emissions on the world's glaciers, wetlands, oceans, and rain forests. SRI advocates have succeeded in convincing corporate investors internationally to buy stocks in new and emerging green industries whose mission is to slow the process of global warming and develop alternative fuels to preserve the earth's rapidly depleting natural resources. As a result of their efforts, socially responsible investing has boosted corporate portfolios in the United States and overseas to over $2.7 trillion in SRI assets.
Investments have been made in industries which are developing ways to decrease American independence on foreign oil. Most notable are emerging technologies which utilize wind energy and natural gas as alternatives to electrical power and imported oil. Green industries also advocate using building construction materials which prevent the overuse of natural forests. Reforestation and the use of fast-growing bamboo instead of spruce and pine as building materials ensures that forests will not be depleted for future generations. As researchers, biotechnologists, and environmentalists race the clock to find solutions to the world's climatic and natural resources problems, socially responsible investing should take center stage and investments could exceed the $3 trillion mark within the next five years.
While the focus for socially responsible investing is moving toward the sustainability of the earth for the good of all humankind, proponents and financial investors are paving the way for future generations to become good stewards over the fish of the sea, the fowl of the air, and every creeping things of the land -- all of which will provide a better habitat for humans and animals. "So God created man in His own image, in the image of God created He him; male and female created He them. And God blessed them, and God said unto them, Be fruitful, and multiply, and replenish the earth, and subdue it: and have dominion over the fish of the sea, and over the fowl of the air, and over every thing that moveth upon the earth" (Genesis 1:27-28).
Socially Responsible Mutual FundsShareholders in socially responsible mutual funds advocate investing money in corporations with a cause. A mutual fund is an investment company which invests a pool of shareholder assets into stocks, public and private owned securities, bonds, and other instruments in order to realize returns. Many funds have as an objective for investing a goal or mission centered on humanitarian, ethical, or environmental reform. Those companies which raise and invest money for causes other than monetary gain are called socially responsible because of a dedication to improve the plight of others, such as refugees overseas, exploited workers in South Africa's diamond mines, or displaced women and children in Serbia.
Other socially responsible mutual funds might buy shares of stock in companies which support human rights issues, such as advocacy for the unborn. Investors may purchase shares in non-profit adoption agencies or homes for unwed mothers. Major investments may be made in corporations whose goals are to provide healthcare for migrant workers, or ensure that poverty-stricken refugees in Haiti receive donations of foodstuffs. Still other socially responsible funding may be invested in research efforts to find a cure for AIDS or cancer. Individual and corporate shareholders may actually play an important role in combating social injustice all over the world. Investing in improving the lives of the less fortunate is a Biblical principle. "For I was an hungred, and ye gave me meat: I was thirsty, and ye gave me drink: I was a stranger and ye took me in: Naked, and ye clothed me: I was in prison, and ye came unto me... And the King shall answer and say unto them, Verily I say unto you, Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me" (Matthew 25:35-36,40).
SRI mutual funds also invest monies in projects to protect endangered animal and sea life or help prevent overuse of the earth's rapidly depleting resources. While investors typically buy and sell stock in order to diversify portfolios and increase principals, socially responsible mutual funds strive to improve or enhance life for human beings and animals on planet earth. In recent years, the focus of socially responsible investing has shifted somewhat from protecting the rights of man and beast to helping to ensure that man and beast can continue to inhabit an earth that still has viable natural resources. Investment companies with a conscience are turning towards green industries, biotechnologies, environmental research, and alternative fuels development firms as possible investitures that will significantly impact the viability of the world.
While there are only a little over 200 socially responsible mutual funds in existence; in recent years, these companies seemed to have experienced more growth than the number of non-SRI corporations. Finding an investment company with a cause is as simple as browsing the Internet for corporate websites. Individuals interested in purchasing shares in a socially responsible mutual fund can study corporate home pages, which usually outline the goals of the fund and give brief biographical sketches of major operating officers. Sites will include a listing of investments and the causes for which they were selected. Humanitarian and ecological concerns are illustrated with graphs and data on the effects corporations have been able to accomplish as a result of the intervention and support of socially responsible mutual funds. Links to societies and associations which advocate similar goals and missions are also part of the corporate website.
The types of instruments socially responsible mutual funds are interested in will depend largely on those which support the goals of the organization. Shareholders who advocate protecting the environment or discovering alternative fuel sources will want managers to explore sector funds, such as companies involved in energy, biotechnology, or sustainable agriculture. Some sector stocks may yield high returns and are not necessarily dependent upon the economy. There will always be a need for energy, health and human services, and technological advancement. Investing monies into companies whose products are in constant demand are wise choices. Emerging markets, industries rising to dominance in developing countries, such as Africa, South America, or Mexico may also interest shareholders who seek opportunities to get in on the ground level with firms that have the potential for growth, although undervalued.
Investment companies which value the sanctity of human life and the environment are also interested in aggressively making money for shareholders. Fund managers may vigorously pursue investing in hedge funds, stocks, and bonds which perform well independently of fluctuating interest rates or lagging economic indicators. Hedge funds offer a measure of protection against potential losses of other assets invested in cyclical stocks and bonds, which may dip drastically in the event of economic downturns. By diversifying portfolios with a wide variety of investment instruments, such as common stocks, growth funds, sector funds, short-term money markets, and those based on emerging markets; managers of socially responsible mutual funds can safeguard shareholder assets and ensure the highest yielding returns. Investing in domestic and foreign corporations which support humanitarian and environmental protection are also smart moves, which benefit countries around the globe by improving economic infrastructures and the quality of life for an international citizenry.
Socially responsible mutual funds also serve the public good in that they may reduce the monetary drain on municipal, state and federal resources for indigent care, global humanitarian aid, and forestry and natural resources protection. Because shares are bought in highly-reputable corporations and agencies which help protect and sustain the quality of human and animal life, dividends earned are more than just monetary. Socially responsible investing not only boosts domestic and foreign economies, but also assures that future generations at home and abroad can enjoy a safe and healthy environment without fear of the extinction of plant, animal, or human life.