What is Socially Responsible Investing?
According do Investopedia.com a SRI fund is “An investment that is considered socially responsible because of the nature of the business the company conducts. Common themes for socially responsible investments include avoiding investment in companies that produce or sell addictive substances (like alcohol, gambling and tobacco) and seeking out companies engaged in environmental sustainability and alternative energy/clean technology efforts. Socially responsible investments can be made in individual companies or through a socially conscious mutual fund or exchange-traded fund (ETF).”
The concept of SRI can be very important to those who are putting money away for retirement and make choices through their financial advisors either to buy or not buy stocks or mutual funds in companies that are not socially responsible.
In the context of the global economy, the maquiladoras, and the companies that own the subsidiary companies that open up under NAFTA at the Mexican border are an excellent example of a company either being a good pick or back pick for the socially responsible investor.
Are you a socially responsible investor? Do you know where your investment funds are going? SRI is like the investment side of the “fair trade” choice for consumers. For example, people who want to buy coffee, clothing or household goods that is “fairly trade” make a choice to buy from a supplier that is certified Fair Trade because they support the concept and practice of the person at the beginning of the supply chain (e.g., the farmer, the factory assembler) being guaranteed enough pay to have a decent living or to support a family.
SRI just takes the decision to support “good companies” through “fair trade” consumption to investments in the stock of the company because they abide by health and safety laws, or they don’t hurt the environment, or they don’t expose their workers to unsafe toxic chemicals, or they don’t fire workers just for raising legitimate complaints for improvement of working conditions.
Resources on SRI: