Socially responsible investment funds and corporate social responsibility

Securities Market relatively new trend in the very vast securities market is socially responsible investment funds. Many individuals choose to invest in funds that are both collective in investment and collective in breath of the kinds of companies invested in. These investment funds share blocks of stock, making it possible for an individual to invest without the full cost of individual investment. Like most trading they are a long-term investment strategy that is often part of an individual's investment portfolio. Prior to the 1990s, though many people took the advice of brokers whose main concern was the development of funds that would ensure return for the investor. In fact for a long time it was assumed that the investor cared little about the business and much more about the potential profit of the investment or the bottom line of the investment potential.

Harrington 52) the individual investor might then be unaware of the kinds of businesses that encompassed the mutual fund. Though the trade names are evident the actual business structure and function requires investor and/or broker research to determine the nature of the businesses within the fund. In this manner investors could be investing in and therefore lending money to companies that go against their general life principles, such as environmentalism, or companies who support, conduct or invest in "sins," such as gambling, alcohol or tobacco, known as "sin stocks."

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In the current market investors have begun to seek to invest in companies that do not support such endeavors and instead seek to invest in companies that support more socially responsible goals. Investors may demand changes to their mutual fund investments or they may ask brokers to better screen stocks to eliminate those which are not socially responsible, or they may even seek out brokers who specialize in a better understanding of investment companies than their simple earnings potential. In this manner investors may feel more guilt free about investing and potentially making profits on such investments.

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The change includes increased consumer awareness of the corporate social responsibility (CSR) of a company to companies seeking to make such commitments to CSR marketable to the public. Companies are taking note that their CSR behaviors are important to investors in both mutual and individual investment funds, not to mention direct sales of products manufactured by the company.

This change is a significant one, and is growing in popularity, expanding to include the development of brokers an firms who specialize in different types of socially responsible business investment. Those who have a particular interest in social issues, such as fair employment or local manufacturing and employment can seek out such a broker. While those who are more about environmental issues can seek out a broker who specializes in finding companies that work within the goals of developing sustainable environmental business practices, energy efficiency, the use of alternative energy sources, green logistics or even those who seek zero waste plants and productivity. In addition to firms and/or brokers specializing in such involvements there is also a growing development of investment funds that seek social responsible status by varied terms.

Some SRI funds try to avoid corporate polluters, among other environmental offenders, while some seek companies that practice diversity. Religious funds might include some of the above-mentioned screens in addition to an aversion to companies financing organizations considered to be pro-abortion, for example, or those permitting same-sex unions. Some funds explicitly operate in accordance with Islamic principles.

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An individual can seek to buy within investment funds that stress the importance of certain faith or personal standards much more easily and can still make long-term profits on such investments.

There is early evidence that such demands on the part of the investor, once assumed to be uncaring about anything but profit

Harrington 52) are changing the manner in which businesses do business and market their business practices to consumers and potential investors.

Mohr, and Webb 45) Though this change may not be an overnight one, and there are clearly still investors who care more about earning potential than any other issues the change has made businesses following long held standards regarding CSR make the world more aware of these standards as well as has demanded change from those who have not been following CSR standards. Diversification of investment information is the overall change to the securities market, as much more information about a company is offered to the consumer than has been previously with regard to standards and procedures. Some believe there is a shift toward more consumer responsibility while others are content to allow such burden to revert back to firms and brokers.

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