Environmental Issues

Concerns about the environment were one of the founding motivators for socially responsible investing. Individual investors and mutual fund managers screen for incidences of environmental pollution, greenhouse gas emissions, deforestation and other corporate activities that can harm the ecosystem. Such behavior can lead to regulatory fines assessed against the company or lawsuits, in which it must defend its actions. Both are a drain on finances and can impact short- and long-term performance.

Health Care

Socially responsible investors are concerned about universal health care and health care reform. They notice how responsive companies are to offering affordable health care plans for employees. While obviously a humanitarian issue, its also a valid bottom-line consideration. Employee medical benefits are important because the health of employees directly impacts a companys profitability. Preventive care reduces health care costs by keeping insurance premiums down. A healthy workforce can also maintain a firms productivity level, while an attractive health care plan encourages valued employees to remain with a company and help maintain a high productivity level.

Human Rights Policies

In Todays global economy, socially responsible investors are interested not only in how a company treats its workers in the United States, but also in other countries. Very often labor laws overseas are not nearly as protective of workers as they are in the U.S. Corporations that take advantage of such laws by moving much of their operations overseas are not attractive to socially responsible investors. Many social activists look closely at the entire supply chain that a company uses to bring its product to the public. Activists have taken aim through shareholder resolutions, for example, at steel companies that purchase pig iron for their production which was mined by slave workers in the Brazilian Amazon.

Community Investing

Community investing is a popular SRI practice that can earn competitive returns while also helping communities in need. Socially responsible investors recognize the lack of affordable housing, available health care and well-paying jobs in many communities throughout the United States. By investing money with community development institutions or community development venture capital funds, they can help finance growth in distressed communities through microloans and training.

Product Safety

Product safety Socially responsible investors look for companies that have good practices of testing products and who consistently meet or exceed government requirements. From an ethical perspective, they want to support companies that care about the consumer and avoid those who think only about a profit. That attitude is in tune with their investing priorities. By exposing consumers to toxic chemicals, faulty equipment, substandard machinery or other hazards, companies run business risks that include the cost of recalls, damaged reputations, litigation, and loss of market share. When those negatives occur, stock values suffer.

Corporate Governance

Political Contributions

Large, well-funded companies can wield an extraordinary amount of influence on elected officials, through lobbying and political contributions. Very often this activity goes unnoticed. Socially responsible investors are interested in the political activities of their companies, where those firms are spreading their influence and for what purposes.

Fair Employment Practices