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Socially Responsible Investing

In: Business and Management

Submitted By maryscry5
Words 661
Pages 3
Mary Harrigan
Financial Management RTG
Professor Kevin Mirabile
April 4, 2014

Socially Responsible Investing
Socially responsible investing is a process of investing in which traditional financial analyses are coupled with an evaluation of a company’s corporate citizenship in order to best determine if a company is inline with potential shareholders’ vision. Socially responsible investing extends beyond analyses of a company’s financial activity through the incorporation of analyses related to environmental, social, and governance issues. This report will examine the origins of socially responsible investing, how it works in practice, its performance relative to non-socially responsible investments, and what role it will play in regard to my future personal investment portfolio. Socially responsible investing rose in popularity during the 1960’s due to the heated political climate. At this time, shareholders prompted companies to act in accordance with their political beliefs as issues like the Vietnam War, civil rights, and equality for women took the national spotlight. Throughout the 1980s, the Apartheid crisis in South Africa further mobilized socially responsible investing as shareholders’ investing strategies became focused on pressuring the South African government to repeal the Apartheid. In more recent years, issues such as gun control, human rights, and healthy working conditions have been the most common platforms in which shareholders advocate for (Schueth). Moreover, shareholders have either urged companies to act in accordance with their beliefs or have chosen to invest in companies that align with these beliefs. The process of socially responsible investing is carried out either through shareholder advocacy or through community investing. Shareholder advocacy is the methods in which shareholders actively engage the company to make corporate decisions that improve society or that are inline with their selected platform. Community investing is the process in which investors’ capital is allocated to improving underdeveloped communities through the creation of social programs (Chamberlain). In order to compare the performances of socially responsible investments to sin funds, I examined the annualized returns of the Pax World Balance fund (SRI) and that of the Vice Fund (Sin fund) as of 2008. For the one-year returns, Pax World Balanced fund outperformed Vice. For the three-year and five year returns, the Vice Fund outperformed Pax World Balance (Smith). In conclusion, I found that the sin funds outperformed the socially responsible funds at the opportunity cost of having a positive impact on society at large.
As a potential investor, I plan to obtain socially responsible investments. I plan to obtain socially responsible investments rather than sin funds regardless of the stock performance because I believe it is necessary for the wellbeing of society at large. Unfortunately in society today, individuals often lack the power to make lasting changes on their own. Individuals may utilize the magnitude and power of corporations to adhere to social or political initiatives that they feel strongly about. Furthermore, I feel socially responsible investments are more reliable as they are managed by corporations with strong values. In conclusion, socially responsible investing refers to the processes of investing in which shareholders encourage corporations to make decisions to better society or allocate their capital toward bettering a community in need. Socially responsible investors express that corporations can earn a profit all while having a positive impact. Socially responsible investing has evolved since its inception in the 1960s and has become a favorable alternative to typical investments in recent years. As an optimistic social activist, I strongly believe in the process of socially responsible investing and will pursue them when shaping my future portfolio.

Work Cited

Chamberlain, M. (n.d.). Socially Responsible Investing: What You Need To Know. Retrieved from Forbes :
Schueth, S. (n.d.). History of SRI. Retrieved from The SRI Conference :
Smith, L. (n.d.). Investopedia . Retrieved from Socially Responsible Investing vs. Sin Stocks :…...

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