What is Socially Responsible Investing?

Socially Responsible Investing (SRI) is defined as an investment strategy that seeks to maximize both financial return and social good. Dating from 1758 when a group of Quakers in Philadelphia prohibited members from participating in slavery, the concept of socially responsible investing has grown to encompass investors who favor corporate practices that promote environmental stewardship, consumer protection, human rights, and diversity with a particular focus on investments that promote environmental sustainability, social justice, and good corporate governance (ESG).

Investors who pursue a strategy of socially responsible investing (SRI) are making sure that their capital is used in a manner aligned with their personal ethics and values. Many of these investors want to take responsibility for what their money is doing to the world around them. There are different definitions of what it means for an investment to be socially responsible, but basically the strategy is to avoid companies that damage the environment (either by treating nature or people poorly), and to favor companies that provide positive goods and services. SRI is not in any way a new idea. Adam Smith himself was concerned about the issue, and the anti-trust and 19th century child labor debates hinged on the same basic issues.

linksSocially Responsible Investing 

Investopedia - Socially Responsible Investing Definition  — "Socially conscious" investing is growing into a widely-followed practice, as there are dozens of new funds and pooled investment vehicles available for investors.

Stanford Social Innovation Review - Socially Responsible Investing  — a collection of podcasts, essays and
articles from Stanford University that talk about conducting, funding and investing in sustainable and socially
valuable enterprises.

Socially responsible investing an increasingly popular option, Fort Worth Star-Telegram, published June 15, 2012
The topic of Socially Responsible Investing (SRI) is the focus of the article, which provides an analysis of why the trend is growing, but the reasoning behind it. Socially responsible investing, or SRI, shot up 13 percent during the Great Recession, according to the US SIF, an association for the SRI community formerly known as the Social Investment Forum. The theme in the article, is that financial advisors can stay true to an investors moral compass, while also seeking higher financial returns.

Can You Conquer Investing With a Conscience?,, June 12, 2012 — Sheyna Steiner investigates the growth of Socially Responsible Investing (SRI) from a “fringe strategy” to a wise investment vehicle that” along with the results that matter to investors -- strong, solid returns” are also realized.

Interest in Socially Responsible Investing Rises,, June 7, 2012 — Elizabeth Wine discusses why Socially Responsible Investing (SRI) has emerged as a popular option for investors. She bases her analysis on a report called Gateways to Impact, which surveyed 1,065 financial advisors. The report found that, “the majority said they’d be willing to recommend sustainable investments to as much as a third of their clients”.  Wine’s reporting also found that clients of financial advisors are increasingly shifting their investments to support their personal values.

Go Green With Socially Responsible Investing, April 6, 2011 — The term, socially responsible investing (SRI), is discussed in depth. The article focuses on the investment process, which relies on values-based or ethical investing. The basic strategies to attempt to maximize financial return, while maintain social good are presented.

Social Investment Forum Foundation, 2011 — The foundation put out its 2010 Report on Socially Responsible Investing Trends in the United States. The report discussed the trend and practice of adhering to specific Environmental, Social and Governance (ESG) factors, when analysis of investments is conducted or construction of a portfolio is underway. The report also highlights when filing or co-filing of shareholder resolutions on ESG issues occurs or deposits, or investments in banks, credit unions, venture capital funds and loan funds that have a specific mission of community investing have happened.

Socially Responsible Investing Comes of Age, New York, NY: TIAA-CREF, December 2006. — Scott Budde and Amy O'Brien — A great article that outlines tenets of socially responsible investing as determined by TIAA-CREF. The article also makes a distinction between corporate engagement best practices and socially responsible investing as far as governance, compensation and board activities.

"A halo for angel investors," The McKinsey Quarterly, No. 1, 2004. — Steven D. Carden and Olive Darragh — McKinsey Quarterly’s take on socially responsible portfolio returns and how doing good can also mean doing well in terms of performance.

"Does Corporate Governance Matter to Investment Returns?" Corporate Accountability Report, vol. 3., no. 7, Sept. 23, 2005. — Jay W. Eisenhofer and Gregg S. Levin — Definitions, information and in-depth reporting on the impact of corporate accountability and good corporate governance on Socially Responsible investing.

"Getting Started In Community Investing, Business Ethics," Summer 2003. — Rona Fried and Marjorie Kelly — Alternative article about socially responsible and community investing with an emphasis on the direct community angle. References the Calvert and Parnassus fund families.

"A new world order Jed Emerson's capitalist utopia. Can social value reward investors, companies?" Money Magazine, October 28, 2002. — Jon Gertner — Older article about socially responsible investing as a way to build a more sustainable and brighter future, while seeking profits. Author discusses idea that portfolios should not only advance the financial aspect of our lives, but that they can and should advance every aspect of our lives.

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