There are many sustainability issues that are relevant today. This page will focus on a particular topic every month.

March's topic: Socially Responsible Investing

A growing trend in the financial world is Socially Responsible Investing (SRI). This is a fascinating topic because people are finding ways to integrate their personal, social and environmental concerns with their financial goals, without sacrificing their conscience.

There are three key strategies that a SRI investor may choose to approach:

1) Exclusion—Companies are screened using a variety of criteria such as alcohol, tobacco, weapons, animal testing, environment, human righs, labor relations, etc. (Wanna be sure? It doesn't hurt to do the homework yourself.)

2) Shareholder activism—Sounds like a movie script, but it's true: shareholders can have a direct impact in the companies they're investing in through social and environmental advocacy.

3) Community Investing—It provides less returns, but great benefits to low income people in rural and urban areas in the USA and around the world. According to CoopAmerica, “If every SRI investor moved 1% of his/her savings and investments into community investing, it would put $10 billion to work in disadvantaged communities.”

Although there is an on-going debate over the performance of SRI investments (in particular mutual funds) statistics tell a different story. The research paper “Does Socially Responsible Investing Hurt Investment Returns” by Phillips, Hager and North found that SRI does not result in lower investment returns. The fact of the matter is, the nature of high risk investments, like mutual funds, is volatile even among non-SRI funds.

If you are interested in learning more about SRIs, here are some good websites for further reading. As much reading as I did and as much as I tried to pass unbiased information to you, I'm no financial planner, so for the love of God, please consult one before making an investment.

Resources:

www.socialfunds.com

www.coopamerica.org

www.sustainablebusiness.com

www.socialinvest.org

Previous Green Thoughts:

Green Thoughts February 2006

Green Thoughts January 2006

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