|Socially responsible investing, or SRI as it
is commonly called, is a concept that on the surface seems to have
merit. The SRI mantra:
invest in companies that promote social and environmental
well-being and you become an ethical investor.
Unfortunately, ethical investing is hard in
difficulty of SRI begins with a very basic question: What constitutes a socially responsible company?
Originally, the goal of SRI was to eliminate from an investorís portfolio
companies involved in the production of alcohol, tobacco and
military products. SRI
quickly expanded to include environmentally friendly
companies, hence the SRI slogan, "green
involved in the exploration/production of oil, minerals and other
natural resources became questionable candidates for socially
responsible investing. Now
there is a new trend in SRI, which is
to focus on
companies that treat humanity with respect and dignity.
Companies that mistreat their employees, including using
tactics like layoffs to boast profits, in principle donít
qualify now as socially responsible.
Combine all these
investing qualifications and few companies can meet the mark. Owning a socially responsible mutual fund certainly does not
ensure you are investing in socially responsible companies.
Because mutual funds often own hundreds of companies, it is
likely that some of the businesses in the fund produce products
that compromise the environment or conduct business that focuses
more on profits than people.
The only way you can truly become a socially responsible
investor is to select your own investments.