Socially responsible investing (SRI) is an investment type that follows a standard to only invest in businesses. This investment only allow investors to invest in companies that have good social values and promote positive outcomes for social problems. The example of those goals is promoting women and education, engaging in social justice, and many more.
SRI avoids investing in companies that seem to cause harm to social wellbeing or the overall humankind.
The Reason behind Socially Responsible Investing
The practitioners of SRI, of course, remember that SRI has been started for more than 200 years ago. It was first practiced by Methodists who practice money management. Other analysts believe that this investing type has appeared even before we have Sharia investing.
John Wesley, the founder of the Methodist movement, always emphasized the importance of not gaining profit at the expense of our neighbors. Therefore, the followers did not invest in the businesses which make money through alcohol, weapons, gambling, or others.
That idea is similar to Sharia investing. This investing type also follows Islamic religious guidelines that prohibit investment in alcohol and tobacco-related business.
Even if Methodist and members of the other faith have applied this principle since a long time ago, SRI has just gained its popularity since the ‘60s.
The Journey of SRI
During the ‘60s when SRI started to gain its popularity, there is dissatisfaction among students and young people led to protest against the Vietnam War. This was also the time when civil rights and racial equality movement rose.
A decade later, during the ‘70s, SRI popularity remains as there is social activism spread to labor management. Besides, this decade also the time when investors started to consider environmental protection before they invest.
In the ‘80s, we started to have mutual funds. These funds allow several screens to filter stock selection, which also supports the popularity of SRI.
In the ‘90s, there had been a wide proliferation of SRI mutual funds and growth as an investing approach. Up to these days, we have witnessed a positive acceleration of SRI as more people concern about environmental protection and human overall wellbeing.
