Socially responsible investing (SRI) warms the cockles of our hearts, focusing on companies that are helping the world -- or at least doing less harm than others. However, if current trends continue, the SRI niche could succeed its way right out of existence.
It's easy to argue both for and against SRI. On the plus side, why wouldn't you want to invest your dollars in (and soothe your conscience with) the most ethical, responsible companies? On the minus side, shouldn't investors pursue the most undervalued companies they can find, however those companies may make their money? Besides, when you buy shares of a company, your investing dollars go not to the company itself, but to whoever sold you the shares.
More people now seem to agree with the favorable side of the SRI argument. According to a new report from Robeco Investment Management and Booz and Co., SRI is expected to grow so much in the next few years that it might encompass 20% of global assets under management by 2015. (That's up from 7% in 2007.) Falling carbon emissions, the rise of clean technologies, and other such factors are reportedly driving this shift.
Going native
If SRI continues to grow at such a rapid clip, it might cease to be a niche, and just become part of regular, everyday investing.
Already, Newsweek has published a ranking of 500 major companies according to their eco-friendliness. You might expect to see plenty of alternative energy companies and other unfamiliar names, but you won't find any such contenders among the list's top 10:
|
Company |
"Green" Score |
|---|---|
|
Hewlett-Packard |
100.00 |
|
Dell |
98.87 |
|
Johnson & Johnson |
98.56 |
|
Intel |
95.12 |
|
IBM |
94.06 |
|
State Street |
93.62 |
|
Nike |
93.28 |
|
Bristol-Myers Squibb |
92.62 |
|
Applied Materials |
91.79 |
|
Starbucks |
91.63 |
Source: Newsweek.
That roster seems little different from the holdings in many traditional mutual funds' portfolios. If companies like Dell become big recyclers, companies like Nike keep reducing waste in their manufacturing processes, and consumer-products companies continue to reduce their packaging, you won't need a special SRI fund to promote social responsibility in your investing. And those of us who've waffled on the merits of SRI may find that dilemma suddenly moot.
