Money and Finance

Published on May 14th, 2009 | by Guest Contributor

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Responsible Investing for a Sustainable Society

Living a life of sustainability begins, no doubt, by incorporating green living principles into your daily life. But to support green living for the greater good of the community, consider extending your practices to impact that which is beyond your immediate reach.  This includes where and how you choose to invest your money.

What is SRI?

Socilaly Responbsile Investing (SRI) has become a buzzword synonymous with business practices in the new green generation. Investors can now put their money to work to build a more sustainable world while earning competitive returns. SRI includes investment in socially responsible projects that positively affect underserved communities worldwide.  For example, projects that raise the living standards of low-income groups or projects that put them to work. SRI gives companies the opportunity to enhance their bottom line and deliver more long-term wealth to shareholders, by investing in these various socially responsible projects.

photo credit: epicharmusWall Street

Wall Street, Heart of US Investing

SRI is closely related to the concept of Triple Bottom Line (TBL or 3BL) reporting. ‘Triple’ refers to the three core assets that companies derive value from: people, planet and profit. So TBL reporting takes into account the impact that a business has in terms of social and environmental values, along with financial returns. Since Corporate Social Responsibility (CSR) implies a commitment to some form of TBL reporting, you know that SRI investments naturally include TBL.

The Social Investment Forum defines Socially Responsible Investing (SRI) as a broad-based approach to investing strategy which recognizes that corporate responsibility and societal concerns are valid parts of investment decisions. SRI considers both the investor’s financial needs and an investment’s impact on society. SRI investors encourage corporations to improve their practices on environmental, social, and governance issues. You may also hear SRI-like approaches to investing referred to as mission investing, responsible investing, double or triple bottom line investing, ethical investing, sustainable investing, or green investing. SRI encompasses an estimated $2.71 trillion out of $25.1 trillion in the U.S. investment marketplace today.

The rapid growth of SRI

Community investing, or projects that direct capital from investors to communities that are underserved by traditional financial services institutions, is probably the fastest growing area of SRI. Community investing provides access to credit, equity, capital, and basic banking products that these communities would otherwise lack. In the US and around the world, community investing provides a huge window of opportunity for local groups to provide financial services to low-income individuals and to supply capital for small businesses and vital community services, such as affordable housing, child care, and health care. Community investing and microfinance resources like kiva.org and Microplace, a new subsidiary of EBay, are providing impactful investment opportunities around the world.

According to Penny Farthing Investment, recent years have seen a growth in SRI. The value of managed investment portfolios with at least one aspect of SRI has grown at a faster rate than all professionally managed assets. This is largely due to the fact that investors are interested in portfolios that ultimately better affect the community. In 2007, assets in the U.S.A with at least one component  of SRI represented at least one out of every ten dollars invested. Now that President Obama has come into power, we are likely to see significant growth in this area, given his mission to build a green economy.

The success of SRI depends largely on raising awareness about it in investor circles.  While many people immediately understand the need for ethical investment, others are not yet convinced. In the last few years, a number of SRI related educational platforms and conferences have cropped up, making this task much easier.

Education about SRI, CSR and TBL

The new UK Ethical Investment Week in May, marks the first occasion on which the financial services industry and grassroots organizations will join to encourage people to consider ethical investment. Read more about this at- http://www.neiw.org. Also in May, the Triple Bottom Line Investing (TBLI) Asia conference will be held in Bangkok, Thailand, details at- http://www.tbli.org. The Green Money Journal has a comprehensive global green events calendar (http://www.greenmoneyjournal.com/page.mpl/calendar.html) which is a great piece fo reference for anybody interested in such events.

If you are interested in SRI, it is a good idea to keep tabs on SRI funds as well as companies that follow CSR and TBLI practices.The Social Investment Forum is a wonderful resource for socially and environmentally responsible investment.  Read more at http://www.socialinvest.org. Another great resource for content related to TBLI, SRI, CSR and companies is the The Inspired Economist (www.inspiredeconomist.com).





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