It's not hard to find articles about socially responsible investing, or SRI, in financial publications and even mainstream media these days. The reason is that by the end of 2005, there was over $2.5 trillion invested using this approach in the United States. Numbers that big are bound to attract some attention.
So, just what is this investment approach and how does it apply to you? Well, socially responsible investing is simply choosing to align your investment decisions with your personal moral beliefs. The idea is that your money is not supporting activities that you are opposed to.
The practice actually began many years ago when some churches began avoiding investment in industries they considered "sinful." Since then it has grown to encompass all kinds of criteria, from environmental issues to which political party a company supports.
This is how it works. An SRI mutual fund typically has a list of criteria they look at when making decisions about which companies to purchase. This is called screening and is the backbone of SRI. For instance, a fund can choose to eliminate all companies that produce pornography. This would be a negative screen. An example of a positive screen would be to invest in companies that are looking for renewable energy sources.
In addition to screening, another core strategy of SRI is shareholder advocacy. In this case, a mutual fund uses it's ownership in a company to try to influence the company to change its policies or activities. This is done through proxy voting, corporate dialogue, and shareholder resolutions.
Because as Catholics we are called to live our faith in all areas of our life, we need to use the socially responsible investment approach to our economic decisions.
There are all kinds of mutual funds out there that have the word social in their title, but what does that really mean? Well, it sure doesn't mean that their investment policy matches your objectives or morals. There are many examples of "social" funds that hold stock in companies involved in abortion and pornography.
The point is that you need to do your homework. Look carefully at the investment strategy of any mutual fund you are invested in, or considering investing in, and make sure that the investment objective matches yours. If it doesn't, get out of it and find an investment that does. Make sure your money is supporting companies that are doing good things for their employees, the environment, and society as a whole.
"Followers of Christ must avoid a tragic separation between faith and everyday life" –– Economic Justice for All.
