Have you ever wondered where the money in your 401(k) or retirement plan is being invested? More and more investors are becoming concerned with this question, leading to a rise in socially responsible investing, or SRI.
SRI generally means investing in companies that benefit society or the environment. However, there is no broad, across-the-board definition of SRI. Different financial service providers use different filters to decide what companies qualify as “socially responsible.” Some common issues that are considered when screening companies are their impact on the environment, labor practices, and any involvement in weapons production.
According to US SIF, an organization that promotes and researches SRI, assets involved in SRI investments increased 13% from 2007 to 2009, even while the economy was struggling. Despite economic uncertainty, people are becoming more committed to investing their money in companies that meet certain standards or uphold certain values.
There is a clear parallel between SRI in the financial sector and ethical consumerism in the retail sector. Just as consumers are beginning to question the ethics of their purchases, individuals are questioning the ethics of their investments as well. When people begin to direct their money to companies that create positive change in the world, and away from those companies that hinder it, we will all reap the benefits.
Do you participate in socially responsible investing? Learn more about SRI and find out how you can get started at US SIF’s resource page for individual investors.