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Getting Started in Socially Responsible Investing
Many investors seek ways to invest their money without sacrificing their values. This is especially true for religious and charitable organizations that seek competitive rates of return from investments consistent with their ethical or moral principles. We call this social justice based on Unitarian Universalist (UU) Values.
The investment world has changed dramatically in the past twenty years, and it is now easier for individuals and organizations to invest in ways that do not violate their integrity while receiving a good return. Some mutual funds and money management firms offer professional investment services that earn market rates of return while pursuing social as well as financial objectives.
Components of Socially Responsible Investing
Negative Screening is the term applied to the strategy of avoiding stock ownership in corporations that make harmful products (e.g. tobacco, weapons) or that have patterns of egregious behavior (e.g. “sweatshop” suppliers, excessive pollution). This form of Socially Responsible Investing (SRI) first became widespread when many investors boycotted companies doing business in South Africa before the dismantling of apartheid, and it is still important today.
Positive Screening is the practice of proactively investing in firms known for corporate responsibility or positive contributions to society or the environment. Examples are companies that have progressive policies on equal opportunity, affirmative action, employee ownership, or that have adopted beneficial environmental standards.
Shareholder Advocacy seeks to change corporate behavior through proposing and representing resolutions at annual stockholder meetings. The Unitarian Universalist Association (UUA) works together with other religious organizations through the Interfaith Center on Corporate Responsibility to influence corporate behavior in this manner. Recent shareholder advocacy has focused on excesses in corporate pay, global warming, and sexual orientation discrimination.
Proxy Voting is an important force for moderating the excesses of capitalism. Each year, companies ask the guidance of shareholders on governance issues such as selection of auditors, board structure, share issuance, etc. Shareholder sponsored resolutions also appear on annual proxy ballots. The UUA uses a proxy voting service, called Institutional Shareholder Services, which votes our shares by proxy according to our strict SRI criteria.
Community Development—Investors can designate part of their portfolio for credit unions, non-profit banks, or funds that make loans to enterprises in low-income communities. Such programs provide capital and technical expertise to communities that are often under-served by traditional lenders. Affordable housing and minority-owned businesses are often goals of community investing. UUA offers a Matching Program for Community Development Investment (Word) (PDF).
Some Useful Resources
- The SRI presentation at General Assembly, Cleveland, offers a good overview of SRI.
- SRI Frequently Asked Questions
- Tools for Congregations—Next Steps for Getting Involved in SRI
- UUA Endowment Fund—Learn about investing your funds in the UUA General Investment Fund which is invested in harmony with UUA Socially Responsible Investing Guidelines.