What are "socially responsible investments"?

Socially responsible investments are made in order to generate some financial gain while doing societal good. Some buyers enjoy investing in companies perceived to be "green" and engaged in environmentally sound practices, offering protection to consumers and defenders of human rights. For example, a typical socially responsible mutual fund may choose not to invest in tobacco companies, polluters, or weapons producers.

What about corporate governance issues? What role do they play in socially responsible investing?

Corporate governance, or the way in which corporate organizations are managed (or mismanaged) also plays a role in socially responsible investing, as more people believe that corporations need to be more responsible and take into consideration underlying supportive social values when making many broad decisions about the strategies of their companies. For example, a socially irresponsible corporation would have no issue using child labor in China, as long as the corporation continues to hit profit targets. Another example may be the high compensation of executives, even after a company fires thousands of employees and teeters on bankruptcy. The full disclosure of information on ex

"Green roofs" are a growing (pun intended) trend in many cities. Companies that encourage such practices may get the added benefit of attracting investors concerned with the environment.

ecutive compensation is an important measure that many believe is often a sign of sound corporate governance. Socially responsible firms align themselves with and support certain broad values, both bottom-up and top-down.

How old is the concept of socially responsible investing?

The original concept of socially responsible investing may have its roots in mid-eighteenth century America. In 1982, Trillium Asset Management was founded to advise investors specifically in sustainable and responsible investing, as SRI is also known.

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