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Doing Good

Are socially responsible investments much ado about nothing?

Even if you were born on a lily pad, it isn't always easy being green. Recycling soda cans, detergent bottles and newspapers is simple stuff compared to preserving the wetlands or saving the whales. When it comes to socially relevant issues, it's wise to remember that the evil men do lives after them, and saving the planet is everyone's job. Some investors choose to take their personal vision into the realm of their investment portfolios.

Ethical or socially responsible investing (SRI) began as far back as the 1920s, when some church endowments avoided investing in "sin stocks," including liquor, tobacco and gambling companies. Social activism reached new heights during the Vietnam War, and this translated into increased vigilance on the part of investors in the 1960s. For the first time, many investors realized that the comfortable companies that provided them with washing machines and TV sets also made warheads and tanks.

With the birth of the Council on Economic Priorities in 1969, public companies were rated on the essential issues of the period, including military contracts, environmental pollution and minority hiring practices.

The politically correct climate of the 1990s has revitalized public awareness about investor activism. More and more investors are considering the products and services of companies in which they invest with an eye to a double bottom line: They not only want to know if the company is a good investment, they also want to know if the company meets their chosen social criteria.

Over the last several years, the hottest issues to emerge in the field of social investing have been environment and labor. Interest in the traditional social issues of alcohol, tobacco, gambling and weapons manufacturing has not diminished, either. Other popular social investment concerns include contraceptives, abortion, pornography, animal rights and nuclear power, to name a few.

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This article was originally published in the October 1996 print edition of Entrepreneur with the headline: Doing Good.

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