The global community seems to contract as individuals have access to an increasing number of media and information outlets. As a result of this expanding awareness, some investors are turning towards socially responsible funds. They want to be sure that they are participating in ethical investing instead of supporting unethical or questionable businesses. These socially responsible investors are asking for more than returns; they want to make a positive impact on society.
Examples of Socially Responsible Funds
Pax World Investments
- Founded by Luther Tyson and Jack Corbett in 1971, Pax World Investments is one of the leaders of ethical investing.
- They screen potential companies to invest in for responsible environmental, social, and governance (ESG) policies and procedures.
- Fund managers combine both financial analysis and ESG analysis when making decisions.
- Pax World Investments offers a number of different funds, such as the Women's Equity Fund, which promotes gender equality, and the Global Green Fund, which focuses on companies which positively impact the environment.
- Amy Domini and her partners, Peter Kinder and Steve Lydenberg, launched their first socially responsible fund in 1991.
- This firm focuses solely on ethical investments; with Domini Social Investments managing the social consciousness and environmental responsibility aspects, and the large, well-established investment firm, Wellington Management, taking care of financial standards and putting together portfolios.
- Not only does Domini Social Investments encourage ethically responsible business practices through investment choices, but it also contributes to community development — partnering with ShoreBank, a federally insured community development bank. They offer options to socially responsible investors such as the Domini Money Market Account, in which money is used for affordable housing, lower-income entrepreneurship, and job creation.
New Alternatives Fund
- Founded in 1982, this smaller, niche mutual fund is ideal for socially responsible investors who are most interested in environmental issues.
- They have a strict set of guidelines to determine who they do not invest in, and who they are willing to support. Oil, coal, weapons, and tobacco companies for example are never a part of the New Alternatives Fund, while fuel cell, solar power, and natural gas companies can all be found on their present list of investments.
Calvert Investments
- A large investment management company founded in 1976, Calvert Investments offers ethical investing as one option for investment.
- Their socially responsible mutual funds focus on impacting corporate responsibility; like Pax World Investments they use the ESG model for choosing businesses.
- They also partake in advocacy of social issues, through promotion and guidance.
The Future of Ethical Investing
According to the article, "The 2007 Report on Socially Responsible Investing Trends in the US," written by Lisa Woll (EurekaHedge, May 2008), ethical investing is the fastest growing segment of investments, with an eighteen percent jump from 2005-2007.
There are many reasons for this, from a broadening perspective due to the ease of communications today, to a logical realization that sustainable companies are likely to be extremely successful in the future when environmental and social conditions have changed. For example, as oil reserves deplete and the price of energy rises, businesses that rely partially or entirely on alternative sources of energy will likely be more competitive than those that rely on traditional sources of energy.
With so many options for socially responsible investors, from small firms with a sincere interest and devotion for the betterment of the community and the environment, to large firms who are skilled at impacting corporate responsibility, there is a perfect socially responsible mutual fund for everyone. It is best to investigate a number of options, and determine which values, and what risk will work for each individual.
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