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Most investors have a concern for social and environmental causes; few of them try to work towards them. Socially responsible investors are those few who invest for a cause and try to make the corporate world more responsible to the society at large. And the good news is that their numbers are growing.
There is a growing awareness among investors about social and environmental issues. Investors are increasingly voicing their concerns on women empowerment, environmental protection, workplace ethics and other such issues. Enron and several other corporate fiascos in recent times have brought corporates under the scrutiny of ethically and socially concerned investors. These new breed of investors scout for good corporate behavior and as their number and clout swells, they could have a strong influence on companies making them more responsible toward society. Social investors could be individuals, businesses, universities, hospitals, foundations, pension funds, religious institutions, and other non-profit organizations. They consciously put their money to achieve specific financial goals while working for the betterment of the society.
It comes as no surprise then that out of every eight dollars under professional management, one is invested for a social or environmental cause. Though socially responsible investments are a relatively small part of total investments, they are increasingly becoming more widely held and potent. Known variously as social investing, socially responsible investing, socially aware investing, ethical investing, mission-based investing, and natural investing, the concept hopes to achieve a social as well as a financial return.
The roots of SRI can be traced back to biblical times when Jewish laws directed investments as per ethical values. Quakers practiced socially responsible investing in North America, as early as the 16th century, based on their beliefs in human equality and non-violence. However, the current movement really began during the Vietnam War when most investors were against their money going to support the war. After Vietnam, the apartheid in South Africa reinforced the power of SRI. In South Africa, investors campaigned to eliminate the institutionalized racial discrimination in the country. Incidents like the Exxon Valdez oil spill or the Bhopal Union Carbide plant disaster, along with constant alerts about toxic waste, global warming, ozone depletion and other environmental threats, continue to figure prominently in the minds of social investors. As socially responsible portfolios move beyond selecting companies that strive to halt their negative environmental and social impacts to choosing companies that are proactive in improving their social and environmental performance, corporates may prioritize social activity. Already, social issues such as employee-employer relationship, human rights in overseas factories, and socially destructive products such as tobacco, have had companies gearing up.
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