Last week a reader asked about socially responsible investments. I recruited a friend to provide a brief overview of the subject. Now Money and Values has posted a terrific introduction that offers more information, as well as plenty of links for further exploration: Socially Responsible Investing, Part One and Socially Responsible Investing, Part Two.

The article defines three socially responsible investment strategies:

1. Social screening — “Positive screens seek out especially good companies on a certain issue, while negative screens avoid certain companies.”
2. Shareholder activism — “SRI mutual funds holding stock in certain companies will often initiate a dialogue with corporate management if they have concerns about certain practices or policies (or the lack thereof).”
3. Community investing — “Using your banking and investing dollars in ways that prioritize helping financially underserved communities get access to credit and capital.”

The two entries answer questions like: How common is socially responsible investing? Does socially responsible investing mean giving up financial performance? What sorts of investment opportunities are available? (Money and Values discusses mutual funds based on specific agendas, including religious mutual funds, as well as non-mutual fund options.)

The article concludes with a series of useful links:

• The Social Investment Forum, including a list of socially responsible mutual funds.
• Social Funds, another site devoted to the topic.
• The Community Investing Center
• Business Ethics Magazine

This is a terrific introduction to socially responsible investing, and a quick read. Highly recommended.

This article is about Investing  Monday, 8th May 2006 (by J.D. Roth)