This SRI article delves into the history of socially responsible investing, especially in terms of how social investing, socially conscious investing, and investing with ethics has shaped world history. Socially responsible stocks, socially responsible mutual funds, SRI mutual funds, socially responsible investments corporate social responsibility, and sustainable investing all shaped the protests from the Vietnam War and aiding in the abolition of apartheid in South Africa.
Early origins of socially responsible investing
The early seed of social investing was planted during the biblical times, when the Jewish law mandated criteria regarding investments. Continuing its development through religious origins, socially conscious investing with ethics was also practiced by the Methodists beginning in the 1700s.
Social investing and its relationship with Methodists
John Wesley, Methodism’s founder, espoused that one of the most important teachings of the New Testament related to how to manage money ethically. In his sermon, “The Use of Money,” John Wesley set forth the parameters of social investing, such as avoiding any business that would do your neighbor, community, or environment harm.
The Quakers, also known as the Religious Society of Friends, took ethical investing a step further, implementing socially responsible investing. During the 1768 Quaker Philadelphia Yearly Meeting, it was mandated that the members disengage from investing in the slave trade.
In 1928, the Pioneer Fund was created to provide Christians a vehicle for socially responsible investment. It was the first socially responsible investment fund to divest from the industries that promoted vice, such as alcohol, gambling, and tobacco corporations. The original Pioneer Fund continues to practice socially responsible investing in today’s modern day, focusing on socially responsible stocks that are in line with their religious values.
Social investing changes the face of war
The contemporary socially responsible investing movement can be traced back to the Vietnam War, which was clearly met with political conflict domestically. When the 1972 photo of a nine year old girl, naked save for the flames burning her back from Agent Orange, surfaced, consumers were in shock – and they took out their indignation by protesting Dow Chemicals and other corporations who were turning profits from genocide. Socially responsible investment funds Pax World Fund and Dreyfus Third Fund engaged in the re-emerged socially responsible investing movement by divesting from companies that held military contracts.
In fact, even up to the annual stockholder meeting in 2007, socially responsible investors have challenged Dow Chemicals’ business practices – especially when it comes to spending more money on public relations than tangible safety policies that risk the community both domestically and abroad.
Lifting apartheid from history
With the growing international resistance to apartheid in South Africa, more socially responsible investors became aware of the devastating results of violent discrimination. In response, Reverend Leon Sullivan, who was on the board of directors for General Motors, created the “Sullivan Principles,” which outlined the policies American corporations should enact while conducting business in South Africa.
As social investing research delved into the effective implementation of the “Sullivan Principles,” shocking reports returned that American corporations were taking no action to alleviate the apartheid in South Africa – which meant these companies were contributing to the discrimination.
In response, socially responsible investment funds, pension funds, religious investment organizations, municipal and state portfolios, and college investments all divested from the American corporations with operations in South Africa. As a result, the lack of investment prompted businesses in South Africa to call for an end to apartheid; considering these businesses comprised 75% of the total employers, their voice was clearly heard. Thus, the use of socially responsible investments played a role in helping to end the cruel regime of apartheid in South Africa.
Writing the history of tomorrow
The socially conscious investing movement continues to grow in prevalence and influence, both domestically and internationally. The social investing screening has grown from an “avoidance” perspective into one that filters for the “best” corporate social responsibility and sustainability policies. With screens for economic, community, and environmental policies, socially responsible investing and green investing will continue to shape the history books of today and tomorrow.
