By Siri Yellamraju, Spring 2016 Student Intern
Investors usually indicate income or growth as their investment objective when filling out an account application form. Another growing investment objective is socially responsible investing. Although investors won’t be able to check off a box that says “socially conscious investing” as an investment objective, they will be able to use certain techniques to make sure they are investing in socially responsible products.
Socially responsible investing or SRI is the practice of making investment choices to make a positive impact. Investors can choose to invest in companies that are transparent about labor practices, environmental impact and other corporate responsibilities. Investors can also buy products and other investment vehicles that put the money directly into community organizations. SRI investments increased by 76% in socially screened portfolios.
SRIs can be traced back to Quaker philosophies of not participating in slave trade. They are also in the founder of the Methodist church, John Wesley’s tenants of social investing: to not harm neighbors through your business practices and to steer away from business practices that involved guns, liquor and tobacco.
There are many different terms that are used interchangeably with SRIs. Other common labels include: “community investing,” “ethical investing,” “green investing,” “impact investing,” “mission-related investing,” “responsible investing,” “socially responsible investing,” “sustainable investing” and “values-based investing,” among others.
A majority of today’s SRIs are managed by public pension funds and religious groups rather than individuals.