Putting the concepts of socially responsible investing into reality means researching corporate social responsibility reports to find socially responsible stocks that will result in SRI investment performance. Reading the reports will assist in investing with ethics, social investing, and SRI.
The key to selecting socially responsible stocks that maximize the triple bottom line is by reading closely and in between the corporate social responsibility reporting lines. However, in analyzing corporate reports, keep in mind that many companies use them as a marketing tool. Thus, simple and honest reports are what you should look for in social investing – while viewing flashy ones with an even more critical eye.
Much of the strength in sustainable reporting stemmed from Europe, which has experienced a greater social investing trend than the US . Thus, considering overseas socially responsible investments may provide SRI investment returns and diversification.
The Association of Chartered Certified Accountants (ACCA) analyzes annual rewards to UK corporations who engage in corporate social responsibility or sustainable reporting. Some of the 2007 winners were British Telecom, Unilever, Vodafone, and BP.
Wealth of knowledge in corporate literature
Often overlooked, a company’s annual report can expose a tremendous amount of information regarding whether it is practicing socially sound or unsound principles. In fact, reading an annual report can often reveal irresponsible business practices or subsidiary operations that would divert socially responsible investment dollars.
Analyzing the corporate architecture
As a part of the triple bottom line, corporate social responsibility governance policies can be delved into through the corporate structure. By reviewing the board of directors’ structure, along with each capital classes’ voting rights, you can discern a tremendous wealth of information regarding the responsibility of a company’s corporate governance policies.
In addition, a socially responsible investor should review recently submitted shareholder resolutions, as this sheds a significant amount of light on potential social responsibility problems. As a cornerstone of socially responsible investing, shareholder activism efforts can determine how well a company is growing its triple bottom line.
Checking sustainability and corporate social responsibility reports
Voluntary sustainability and corporate social responsibility reports are strong indicators of a company’s efforts to be socially responsible. Highlighting efforts related to community, employee, corporate, and environmental sustainability, these reports are becoming increasingly prevalent.
The Global Reporting Initiative (GRI) sets forth the standards for sustainability reporting. If a company is abiding by these principles, it generally is a positive sign that they are genuinely making efforts to increase the triple bottom line. Approximately 62% of the S&P 100 Index companies publishing sustainability reports abide by the GRI.
According to research conducted by the Social Investment Analysts Research Network , approximately 40% of companies listed on the S&P 100 Index and 82% of the largest global companies publish sustainability reports.
Regardless of your interest in social investing, reading the sustainability, corporate social responsibility, and annual reports is a smart investment strategy. These reports provide the investor with a wealth of knowledge regarding the pressures the business faces, the effectiveness of its corporate governance policies, and its ability to adapt to market changes. For the socially responsible investor, the research for triple bottom profits pays two-fold – both in profits and an ability to contribute to social good.
