If at any time you have heard of Socially Responsible Investment (S.R.I.) and you have thought that maybe they are somewhat alien terms, congratulations, you are not so strange. You are part of a large group of people to whom this concept is an exclusive issue of large international funds or investment firms with diversified portfolios around the world. But nothing could be further from the truth. Socially Responsible Investment (S.R.I.) is for all the public.
What is socially responsible investment? Well, it´s the one that combines financial objectives with a series of criteria that could be summarised as:
Social criteria: a focus on respect for Employment Rights throughout the supply chain and Human Rights, as well as on behaviour towards customers and employees. It may include other topics such as diversity or animal rights, amongst others.
Environmental criteria: a focus on the environmental policy carried out by the company being invested in, as well as external and internal management systems and indicators for measuring emissions, solid waste, water, climate change, etc.
Corporate governance criteria: principles of good governance, female presence in the management team, compliance with ethical codes, organisational guarantees that management will always make their decisions based on the benefit of the company and not on their own.
This combination of ethical criteria in the financial world may seem to be something innovative and over-professionalised. But if we take a closer look at the history behind it, we will realise that it is a concept that has always been there. Both in different times as in different cultures. And the examples keep taking place.
Thousands of years ago, Jewish law established that a Jew could not do business that violated ethical, moral or religious codes. Also, in the eighteenth century, Methodists or Quakers refused to invest in businesses related to slavery, tobacco or alcohol. In the 1960s, the rejection of the Vietnam War and the Civil Rights movement in the United States allowed the creation of the Pax World Funds in 1977, and in the 1980s, South African apartheid made it possible to create the Stewardship Pension Fund in the United Kingdom, in 1984.
All these cases and many others are examples of vital coherence. In the end, it has been and continues to be a question of guiding your investments according to your vital and ethical beliefs. To be sure that as an investor, you will not be financing with your money companies that do not respect human and employment rights, as well as the environment. Socially responsible investments are a rational decision in every sense: not only is profitability achieved and benefits maximised, but in turn a more just and healthy world is promoted.
But when we talk about benefits is when doubts begin to appear. It is possible that when a socially responsible investment fund has to be chosen, many unresolved issues will emerge about the ethics of the companies in which you are investing or even about the ethics of the fund managers themselves.
It is not advisable to be discouraged by the technical barrier and slang used by the financial world to justify its erudition. There are many tools, regulations and investment strategies that allow maximum transparency to adapt beliefs to action.
Particularly noteworthy is the case of the Norwegian Government pension fund. For many years, the Norwegian Ministry of Finance, the Ethics Board and the Fund itself have been transparent in their selection process, the expectations of companies and the justification of their decisions. This quality in the process and its transparency have allowed other investors to imitate their actions, because if they are transparent, not only will beneficiaries be better informed, but other investors can be inspired by their good practice.
Little by little, investors around the world are becoming aware. And the numbers reflect it. According to Nasdaq figures, in Spain the percentage of socially responsible investments reached 13.7% of the total in the middle of this year, slightly above 10.8% throughout the whole of Europe, while in the retail sector this figure is at 10%.
Ultimately, making money with investments matters, but doing so by contributing to the development of Human Rights, protecting the environment and overcoming inequalities is an option too important to leave only in the hands of large investors and financial institutions.
Yes. Socially Responsible Investment (S.R.I.) is for all audiences.
Francisco Comino, Director of DIA Group Corporate Social Responsibility.