Socially responsible, ethical, mission-based, or natural investing — no matter what people call it, those terms all refer to investing that factors in societal or belief-based concerns. Some funds under this umbrella won’t invest in tobacco stocks, while others limit themselves to “environmentally responsible” firms, and still others examine a company’s labor policies.
More than $2 trillion is held in socially screened portfolios according to the Social Investment Forum’s 2001 report. That’s one out of every eight dollars under professional money management.
And that’s a lot of concern; so much that recent growth in socially responsible investing outpaced traditional investing by a double-digit margin. Between 1999 and 2001, socially responsible investing (also known as SRI) grew at a rate of 36 percent, while investing as a whole grew at just 22 percent.
The goals of SRI aren’t all that different from traditional investing, says Mark Bateman, managing director of research services at the Investor Responsibility Research Center. “Socially responsible investors aren’t investing to make a difference,” he says. “They’re hoping to make a difference while they make money.”
If you’d like to calculate the social responsibility of the funds you already own, test them with Calvert Group’s Know What You Own service at www.calvert.com. The social fund manager provides a host of screens, including animal welfare, tobacco, alcohol, corporate human rights, and nuclear power. If you’re thinking of trying one of the more than 230 socially screened mutual funds in the U.S., start at www.socialinvest.org, the home of the Social Investment Forum, a national nonprofit group promoting SRI.