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Socially Responsible Investing
Written by Robert Valentine   

Not so long ago, the phrase "socially responsible investing" might have brought to mind environmentalists keeping their investment dollars out of companies they believed to be damaging the Earth or animal rights activists rejecting companies who tested their products on harmless creatures.

As the socially responsibly investing, or SRI, sector has grown, its definition has also diversified. Today the phrase encompasses any investment strategy targeted at aligning an individual's portfolio with their personal convictions. The Social Investment Forum's 2005 Report on Socially Responsible Investing Trends in the United States identified $2.29 trillion under professional management involved in one or more of the three primary socially responsible investment strategies.

Screening, shareholder advocacy and community investing are the three most common SRI strategies. Screening (the practice of choosing or excluding investments from a portfolio based on the investor's personal criteria) may be the most commonly known. Individuals may choose to invest, for example, only in companies headed by women or individuals of a particular ethnicity. Or, they may choose not to invest in companies that conflict with their personal beliefs. In addition to the traditional "sin" stocks of gambling, pornography and alcohol, an investor's "anti" list might include tobacco, nuclear weapons, defense, companies with poor records on labor relations or the environment, religious issues, animal testing or any other issue.

Shareholder advocacy uses the voting rights associated with stock ownership to promote change within the company. Anti-apartheid organizations used this strategy to get companies to pull out of South Africa in the early 1980s. Community investing directs capital from investors to communities that lack traditional financial services such as credit, equity, capital and basic banking products (services that a community needs to grow and thrive).

According to the Social Investment Forum's study, socially screened mutual fund assets grew 15-fold over the same 10-year period from $12 billion to $179 billion, outpacing the growth percentage of the mutual fund industry, as a whole, in the U.S. However, financial professionals who specialize in socially responsible investing point out that excluding certain companies (or in some cases, certain sectors) from an investment plan can result in potential financial consequences. Performance, benchmarking, implementation and diversification issues may make these investments more difficult to evaluate. In some cases, that may mean an investor has to choose between his beliefs and his bottom line.

If you do choose to factor your personal definition of social responsibility into your financial plan, keep that trade-off in mind. Trying to compare your SRI-screened portfolio's performance to general indexes like the Dow and S&P 500 may not be accurate comparisons. The Domini 400 Social Index, run by KLD Research & Analytics Inc., attempts to provide a SRI-related benchmark but again, index results may not adequately reflect the result of including or excluding specific investments.

If aligning your investments is important to you, talk to your financial advisor about socially responsible investment strategies and their potential impact on your portfolio. If your objection to a company's practices or politics doesn't keep you up at night, you may be better off donating cash or time to the organization than weeding through thousands of investments looking for a soul mate.

About the Author

Robert Valentine is a well-known expert in the matters concerning investors. His popular Retirement Planning articles have been published by several publications throughout the United States. Please visit his website, http://www.themoneyalert.com to view his column.

Disclaimer: The articles in the Other Views and Perspectives section are provided as a way to provide some outside perspectives and views about socially responsible investing. SRI Stocks does not endorse any of the ideas and views expresses in these articles. SRI Stocks is not responsible for any consequences of your decision to follow any of the recommendations in these articles.

 
What Are Sri Funds? by Paul Graham
Written by Paul Graham   

1. SRI

Socially Responsible Investing is what SRI is an acronym for.Of course, Socially Responsible means different things to different people and to different funds and index managers as well.

Try to make sure that you are involved in SRIs that are right for you.

2. SRI Funds

What SRIs include can vary. Some funds will exclude any stock whose company might be involved in animal testing. Some funds put more emphasis on how a company treats its employees. This process of inclusion or exclusion is called screening, and each fund has its own screening criteria. Knowing the screening criteria can be a big help in deciding which fund is right for your style of investment.

3. Well know SRI indexes

The completion of the series extended the availability of information on Socially Responsible Investments to cover 90 percent of the worldâs financial markets. According to FTSE The FTSE4Good index series was created to provide SRI Investors with an independent and accurate tool to measure the performance of companies meeting international CSR standards. FTSE for good and the Dow Jones Sustainability Index are the most commonly known SRI indexes.

4. Dow Jones Sustainability Group Indexes

Companes have been screened by the Dow Jones Sustainability Group Indexes based on certain things since 1999. The foundation for them is a cooperation.

5. The Future Of SRI

An important thought leader study, The Future of Socially Responsible Investment, was published in 2005. It captured and analyzed the 10-year-ahead thinking of 42 of the world's leading SRI practitioners, who collectively see SRI, and in particular Screening, as becoming mainstream investment practice -- entirely because SRI analysis does provide valuable insight into management's ability and thoughtfulness. Other significant trends include the continued growth and robustness of Community Investing, and in particular the evolution of Shareholder Engagement as the defining factor that distinguishes the 'Deep SRI' firm from others.

Disclaimer: The articles in the Other Views and Perspectives section are provided as a way to provide some outside perspectives and views about socially responsible investing. SRI Stocks does not endorse any of the ideas and views expresses in these articles. SRI Stocks is not responsible for any consequences of your decision to follow any of the recommendations in these articles.

 
Socially Conscious Investing
Written by Raleigh Makarechian   

First let’s look at the phrase ‘socially conscious’. In its most basic form, it means to be aware of how your actions impact other people, places or things. A socially conscious person, for instance, would not throw trash out of his/her car window on the highway, because while it might benefit him/her to have a tidy car, it will make a mess out of the grounds along the highway. Nor, would a socially conscious person start a fire in a heavily wooded area during a draught, because, while it might benefit him/her in the short term, it could have a disastrous impact upon the environment for years to come. Acting in a socially conscious manner simply means ensuring that any and all of your actions do not inflict harm on people, places or things around you.

For some reason, in the world of investing, this is a really difficult concept for financial advisors and stock brokers to grasp. Case in point, do you really enjoy having your stock broker or financial planner make excuses about how an investment lost 20 – 30 – or even 50% of your original principal? Have you spoken to them about poorly performing investments and they advise you to ‘wait it out’? After all, it really does not matter to them whether or not you recover your losses; they earned their commission already. When you invest your hard earned money and they lose most or all of it; they are not acting in a socially conscious manner. They earned a commission while you lost your shirt; they gained in the short term and you are left with a long term destruction of your investment portfolio. Investing does not have to be this way!

How long would you last at your job if you continually lost money for your company? My guess is; not long. Yet, the average investor is very willing to place his/her hard earned money in mutual funds and pay a manager to lose money year in and year out. That does not make very much sense does it? I’m glad you agree.

You deserve to have financial advisor's, who treat your portfolio as if it were theirs. The recent explosion in hedge funds demonstrates this quite clearly. Investors are becoming less willing to pay commissions to a broker who loses money. With a hedge fund, the manager does not earn any commissions unless you make money. So, as one might expect, the manager works very diligently to ensure the fund makes money. This is how every managed account should be treated.

How do Jerry and I do it differently? Well, first and foremost, we only place our clients in principal protected investments. While many of them offer above average returns, you can rest well at night knowing the dollars you invested will still be there, in tact, when you need them most. We only make money, if you make money. That’s the way it should be, shouldn’t it?

About the Author

Raleigh Makarechian RFC® FMM™, founder and co-owner of Wealth2020, Inc., obtained a Bachelor of Science degree in Accounting from the University of Michigan, Ann Arbor. Ms. Makarechian has been in business and financial planning for over twelve years. As an alternative investment specialist, she reviews an investor’s entire portfolio and maps out a strategic plan to maximize investment returns and minimize tax consequences, during the entire life of the plan. She lectures on a regular basis to other professional investment groups and community social groups throughout the US.

She and her partner Jerry Gallegos have just completed their new book, Create Wealth On Auto-Pilot. You may preview it at http://www.invest-for-wealth.com

Disclaimer: The articles in the Other Views and Perspectives section are provided as a way to provide some outside perspectives and views about socially responsible investing. SRI Stocks does not endorse any of the ideas and views expresses in these articles. SRI Stocks is not responsible for any consequences of your decision to follow any of the recommendations in these articles.

 
Environmentally Friendly Investing
Written by Brian Carr   

It looks like investing for green now has a double meaning.

A couple of years ago, if you would have asked someone about "green investing" they probably would have told you that you were just trying to make some cash. Today, "green investing" not only means investing to make money, but to invest your money in an environmentally friendly way.

So, how can you get in on this type of investing? Aside from investing in mutual funds that specialize in these sorts of companies, it seems like there's really one of two ways for you to invest your hard earned money "greenly":

  1. Invest in companies whose sole purpose is to be environmentally friendly - i.e. companies that focus on recycling, research and development of renewable/alternative fuels, etc.

  2. Invest in companies who have put significant resources into making sure they do business in the most environmentally friendly way possible - i.e. making their offices more energy efficient, encourage their employees to telecommute, etc.

Now that you know where to start, how do you go about finding these sorts of companies? Listed below (in no particular order) are some simple things I have done in the past in order to identify companies that are doing things a bit greener than their counterparts.

  • Keep up to date with current events. Sites like Treehugger.com and Hugg.com are great places to find stories on environmentally friendly companies.

  • Keep your eye open for environmentally friendly products when you're out shopping. In most cases, companies that are willing to put out environmentally friendly products tend to be environmentally friendly companies!

  • Remember that industries such as oil, logging, home building, etc. probably aren't the best places to start your search.

Keep in mind, just because a company does things in an environmentally friendly way doesn't necessarily make them a good investment. Please make sure that you do a good job of researching each company (meaning you have to put in the due diligence) before you decide to invest in them.

There's no point in investing in a green company if it's not going to give you a good return on your green!

Please visit Saving Without A Budget for more money saving tips like this. Saving money is easy, I'll show you how.

Disclaimer: The articles in the Other Views and Perspectives section are provided as a way to provide some outside perspectives and views about socially responsible investing. SRI Stocks does not endorse any of the ideas and views expresses in these articles. SRI Stocks is not responsible for any consequences of your decision to follow any of the recommendations in these articles.

 
Ethics - The Conscience for Decision Making
Written by Billy Arcement   

With the continuously surfacing scandals in Corporate America, the idea that any form of ethics exists in business is suspect. We are also seeing similar situations within the ranks of government and religious leaders. And, the lack of ethics is not confined to America. It's global!

By definition, ethics reflect the type of morally permissible standards of conduct a group places upon themselves. It is basically a contract with the society an entity serves. Greed, the desire for power, and blind ambition are some of the factors that have all but eliminated ethical standards. We have lost our conscience. It seems that anything one can get away with to reach their defined pinnacle of success is becoming more and more acceptable.

But the truth of the matter is that a society without rules is a society that is on the brink of chaos and self destruction. Likewise, a society with the wrong kind of rules will ultimately suffer the same fate. Now I'm not sounding the doomsday bell. We still have much residual ethics left in the world to overcome the current trend. But, like a natural resource, our supply is getting lower and we must reverse this downward spiral otherwise a valuable fabric of human society will disappear.

What about you? Do you have your own personal code of ethics that form the core of your decision making process? Allowing a small slip today, without a checks and balance system, can ultimately lead to a major spill. Bad habits start small and can quickly grow into an unethical monster. Without conscience serving as a standard of measurement, ethics disappear.

Once we could say that a strong religious orientation was a good standard to govern our ethical conduct. But today, when religious zealots kill in the name of their god, they taint the idea that religious beliefs always produce ethical behavior. Patriotism was once considered a driver of ethical behavior. In my lifetime, I have witnessed a sharp decline in the loyalty to the American ideals of yesteryear. We now have leaders in America speaking out against these ideals almost to the point of being treasonous. These are scary times.

Call me a sentimentalist or a fool but I believe that eventually good triumphs over evil. The lackluster presence of any kind of ethical standards simply means that the effort to turn the direction of our global society must be increased. There has always been unethical behavior in the world. Apathy and acceptance of behavior blatantly unethical must be replaced with a commitment to return to sound principles of conduct. As a starting point, let me suggest that if we simply all began to follow the mandates of the Ten Commandments and the Golden Rule, we'd be very much on the path of corrective action.

Start with yourself. Hold "you" to high standards and morally sound ethical principals centered on the eleven rules just mentioned. By your example, others will begin to see the soundness of your actions. Your life can affect the life of friends and family. Don't underestimate the power of one. Make a difference by teaching the world to return conscience to decision making.

The next time you face a particularly difficult decision, try answering these questions:

* Can I share my decision with everyone?
* Is it legal?
* How does the decision make me feel about myself?
* Who does this decision negatively impact?
* Why am I making this particular decision?
* Have I clearly defined the problem requiring a decision to be sure I'm addressing the correct issue?
* Does this decision serve the company or me personally?
* Is the decision based upon facts consistent with fair play?
* Is the decision consistent with organizational values and culture or my own personal system of ethics?
* Is the decision fair and balanced to those it impacts?

The answers to the above list of questions will clearly identify the ethics of a decision relative to your own personal standards. By being very clear on our five to ten core values, we establish the ground rules for running our life. We know when we act contrary or incongruent to our values. Ignoring this feeling usually gets us in trouble. Most understand the difference between right and wrong. They just choose to follow wrong!

Some Final Thoughts on Ethics

Everyone has moral autonomy. We have the power to make individual choices, important to us, as we move through life. Choices are based upon the personal set of values we've established as rules for how we will live our life. Most understand that all choices are not necessarily ethical. But most know when such choices are made.

Whatever ethical standards we've established for ourselves are with us twenty-four hours a day. There is no different set of business ethics. Our personal ethics come to work with us.

We need to be more keenly aware when we have ethical lapses and continuously strive to make them less frequent. Life is not perfect and we are not perfect. Placing a high moral standard to govern our actions is the right thing to do. The question to answer is, "Do we have the moral courage to do so?"

About the Author

Billy Arcement, MEd.,-The Leadership Strategist, is a seasoned professional speaker, author, facilitator and coach. Learn more about his services at his website, http://www.SearchingForSuccess.com Call him directly at 225-677-9426 or email This e-mail address is being protected from spam bots, you need JavaScript enabled to view it Copyright 2007

Disclaimer: The articles in the Other Views and Perspectives section are provided as a way to provide some outside perspectives and views about socially responsible investing. SRI Stocks does not endorse any of the ideas and views expresses in these articles. SRI Stocks is not responsible for any consequences of your decision to follow any of the recommendations in these articles.

 
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