Socially Responsible Investing

Socially responsible investing (SRI) is an investment strategy that seeks to optimize environmental and/or social benefits as well as financial returns. In addition to financial indicators such as risk, returns, and asset allocation, socially responsible investors look at nonfinancial factors—social impacts, environmental impacts, and issues of corporate governance—of investments that are often an extension of their own personal life views and values.

[Page 462]Corporations operate in a complex, market-driven environment, and SRI uses market tools to reward and encourage ethical and responsible behaviors. The beginnings of SRI trace back to faith-based groups such as 18th-century Quakers, who avoided any investments associated with war and military weapons. Currently, according to a recent report on U.S. trends by the Social Investment Forum, SRI is growing faster than non-SRI ...