Socially responsible investing (SRI) means making investments in corporations with a view of the impact of investment on the society and environment. Prior to conceptualization of this phenomenon, return on investment used to be the sole criterion for creating an investment portfolio.

Early 60′s saw the emergence of socially responsible investments. Initially, these were met with lot of counter pressure tactics from people with vested interests. However, events during apartheid regime in South Africa helped further the cause of supporters of social investing.


There are two schools of thoughts, one pegged against this concept of SRI, another a strong supporter. Those against SRI claim that SRI is one more concept emerging from the third page columns, and is detrimental to the main cause for a corporation to exist – that of creating wealth and ensuring good return on shareholders’ investments.

Those supporting SRI assert that every corporation existing on mother earth must act so as not to be against basic human values and set of ethics. These include human relations, waste cycling, policy of non-discrimination, environment friendly products, etc.

Putting these in other words, corporations must shoulder social responsibility in addition to its corporate objectives of making profits and returns on investments. Thus, corporations shouldering these responsibilities should get money from the society. SRI works on these premises.

SRI – Current Scenario

Today, investments with social responsibility have become a norm. Investors loaded with a strong favor for social responsibility have their offers open for companies following certain norms. These socially responsible investors follow a four-step process – identifying financial goals, determining key social issues, identifying companies pursuing such socially responsible behavior, and making investments in such companies.

First step involves clear establishment of what one wants to get from the money to be invested. If the goal is maximum return on investment, socially responsible investment doesn’t matter.

Second step involves setting out important social / environmental issues.

One may consider environmental issues like waste paper treatment or affluent treatment more important than social issues like discrimination against gender or religion. Once these have been set, next step is to identify companies that follow almost similar philosophy.

Mission statements and code of conduct of various corporations can throw lot of light on this. Once such like-minded companies have been identified, it is time to invest.

Remaining all the applicable parameters of socially responsible investments are no different from any other normal investment. There are three strategies available for SRI – ethical investing, alternative investing and social investing.

Ethical investing incorporates utmost importance given to ethical issues while social issues are most important for social investing. Alternative investing means putting money in cooperative banks, community based corporations, etc.

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