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  Friday November 24, 2017

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WHAT IS SOCIALLY RESPONSIBLE INVESTING?
Learn even more about this topic with the Encyclopedia of Personal Finance™

Socially responsible investing is the practice of investing according to personal ethical criteria.

On one level, it involves avoiding investing in products and industries that run counter to what the investor believes is best for the world. It also involves actively seeking out opportunities that the investor believes promote positive economic and social goals.

Socially responsible investing began in American churches as a way to invest church funds in industries that promoted ethical and religious goals. Alcohol, tobacco, gambling, and weaponry were among the more commonly weeded-out investments.

"Responsible investing" is a very subjective term. What one person calls responsible, another may not. For example, a company may have a good record for hiring minorities. It may also fund projects that benefit the community. However, this same company may also produce a product that pollutes the environment or that has been shown to affect human health adversely.

Some investments fit many investors' concepts of responsibility without expressly being called "responsible." Municipal bonds, for example, finance hospitals and libraries, among other projects most people consider socially beneficial.

Although many people question the profitability of investing according to ethical goals, many others believe that it ultimately works for profit rather than against it. Investors of this type note, for instance, that healthy workers are more productive and a protected environment yields more food and other products.

With all this in mind, what do investors look for when they seek to invest ethically? We will look at that next.




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