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Socially Responsible Investing

section-photo Consider:
  1. Shifting your financial resources into socially and environmentally responsible funds
  2. Know where your money is going. Is it ok with you to be invested in weapons manufacturers and agricultural chemical companies, etc?
  3. Research any responsible fund you select to understand the portfolio holdings,
    see www.responsibleinvesting.org
  4. Join or start an investment circle- a group that practices investment for changes they feel are important.

Socially Responsible Investing (SRI) is a type of financial investment planning that takes into consideration a variety of social and environmental concerns. The Social Investment Forum (www.socialinvest.org) developed an excellent guide SRI and the following is an excerpt. Visit www.socialinvest.org for the complete guide:

Screening is essentially choosing to include or exclude certain types of investments in a fund based on the values and beliefs of the investor. Screening may be broad, such as selecting for companies with strong general social and environmental records or it may be more specific. For example, screening might mean building portfolios that exclude investments in all companies producing weapons, holding military contracts and processing fossil fuels. SRI companies typically produce portfolios to select from as traditional firms do, with the addition of screening.

Shareholder Advocacy essentially means investments are made in a company so as to affect the social and environmental practices of that company. In this case, shareholders choose to invest in a company and then participate in shareholder meetings and elections to guide decision-making and voice approval or disapproval.

Community Investment and Social Venture Capital are types of investing aimed at providing communities either domestically or abroad with resources to build capacity while earning a return for investors. These types of investments may employ evolving strategies, such as micro lending (Small loans made with high interest to individuals unable to establish credit for the purpose of establishing a business.) See The Community Investing Center (http://www.communityinvest.org/overview/what.cfm) for a full discussion.

It is important to note that the SRI industry has not been without criticism. As when making any important decision, it is important to research the firm you are interested in having manage your finances. Returns on SRI portfolios vary and many have approximated the performance of traditional investment packages. The financial performance records are generally easy to find for SRI companies. However, it is also important to understand how good of a job the company has done in achieving the stated goals of the portfolio related to social or environmental investing. Paul Hawken and The Natural Capital Institute
(www.naturalcapital.org/Projects.html)
produced this report in 2004 examining the trend of SRI firms investing in companies with unclear practices and produced a database of holdings for SRI firms in North America, available at www.ResponsibleInvesting.org Consider looking up the actual holdings of any SRI firm you choose to invest with.