Trend of Socially Responsible Investing

The scope of the SRI industry encompasses environment, social justice and corporate governance (ESG), and while socially responsible investors may focus on corporate companies that actively promote environmentally friendly practices, many are also interested in the company’s stance on consumer protection, human rights and cultural diversity in the workplace. Some socially conscious investors may avoid businesses involved in the manufacture, distribution or promotion of tobacco, alcohol, gambling, weapons, and abortion.

While SRI may be gaining momentum in our day, its origins go back to the mid-1700s when the Religious Society of Friends (Quakers) prohibited its members from getting involved with anything to do with the burgeoning slave-trade at the time. SRI remained closely connected with religion when John Wesley, co-founder of the Methodist Church, outlined basics of social investing by advocating doing no harm to your neighbor in business practices. This included the manufacture of guns, alcohol and tobacco, as well as any type of work which could harm the health of workers, such as working with dangerous chemicals.

Socially responsible investing started including social and political elements in the 1960s when Dr. Martin Luther King tackled various history-making social issues with boycotts and dialogue. The Vietnam War raised a whole host of issues that socially-conscious investors had to consider. For example, the Dow Chemical company manufactured the infamous napalm that made enormous profits for the business, while causing immeasurable suffering to innocent victims.

Through the years as society has evolved, so has the face of SRI. From the 1970s through to the early 1990s many international companies pulled out of South Africa in opposition to that government’s apartheid policies. The effect was so far-reaching that a group of businesses representing up to 75 percent of employers in South Africa, drafted a charter drawing attention to the damage that apartheid was doing to the economy, and calling an end to a system that was so blatantly contrary to human rights that it was internationally condemned. It is widely agreed that the persuasive international pressure of SRI played a significant role in bringing about the process that led to the end of apartheid in South Africa.

Today, socially responsible investment opportunities are expanding on a global scale, with investors in both developed and developing countries joining the socially-conscious ranks. And as investor numbers grow, organizations have been formed to monitor and promote SRI. These include the Social Investment Forum (USA), Social Investment Organization (Canada), EuroSIF (E.U.), and the Responsible Investment Association of Australasia.