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Socially responsible investing (SRI)
has been around in some form for more than 200 years, but it has become more prominent on
the investing scene in the last 40. It's also known as social investing, ethical
investing, values based investing and mission based investing. It is a way for
individuals, corporations and institutions to merge their investing with their
values. It empowers investors to "vote" with their pocketbooks as a way to
influence governments or corporations, hopefully improving the quality of life throughout
society.
SRI in the United States was first practiced in the late 1700's, when members of the
Methodist Church refused to invest in companies that were involved in alcohol, gambling
and tobacco. As the Quakers settled in North America, they refused to invest in
slavery or weapons. The modern roots of SRI began with the politically-charged
1960's. Social responsibility gained more attention as thousands demonstrated for
civil rights for women and minorities, protection of the environment, labor issues and
anti-nuclear issues. Then in the 70's, all eyes turned to apartheid in South
Africa. It is generally acknowledged that apartheid finally ended because of the
world-wide boycott.
And who can forget Kathy Lee Gifford and her PR problem surrounding the alleged use of
child labor to manufacture her line of clothing?
So, how big is socially responsible investing today in the U.S.? As William Shatner
so ably says: "Big....really big." According to a recent report
published by the Social Investment Forum (http://www.socialinvest.org)
assets invested in socially and environmentally responsible investments topped the $2
trillion mark last year. That's up from $40 billion in 1984 and $639 billion in 1995.
The Social Investment Forum report also indicated that:
- One out of every eight dollars under professional management in the U.S. today is part
of a socially responsible portfolio
- Growth of assets involved in SRI grew at twice the rate of all assets under management
in the U.S.
- The competitive performance of SRI mutual funds has greatly improved in recent years
- The revelation that tobacco companies withheld evidence about the health risks of
smoking and the targeting of teenagers in advertising campaigns helped increase SRI
awareness
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