Socially responsible investing (SRI) introduces social or environmental criteria into the investment process.

Based on the premise that good corporate citizenship influences long term business viability, SRI seeks out profitable, industry-leading companies that have positive records on issues ranging from community relations and diversity to product safety and environmental management. It is not a new idea. A century ago, SRI consisted simply of avoidance: Tobacco, alcohol, and gambling companies were avoided and everything else was included. In the 1960s, the world began to focus on environmental concerns and their economic impact. Soon after that, Apartheid in South Africa became a focal point of investors. Within the last 20 years, SRI has evolved to include such topics as:

• Carbon production and global warming
• Renewable/sustainable resources:
  • Biofuel
  • Wind energy
• Factory work environment issues
• Community investing and microlending
• Shareholder relations and corporate governance
• Water accessibility and quality
• Social and humanitarian issues:
  • Child labor
  • Darfur exposure
  • Diversity recognition
• Ethical business practices:
  • Accounting transparency

SRI is a multifaceted and growing sector of the global investment markets. SRI assets under professional management rose from $639 billion in 1995 to $2.29 trillion in 2005 according to the Social Investment Forum’s 2005 Report on Socially Responsible Investing Trends in the United States. The industry has moved from simply avoiding companies to a more complex approach which involves a strategic combination of screening, shareholder activism, and community investing.