Viewpoint: “Social Responsibility” in Investments is Open to Interpretation

Wednesday, July 22, 2015

Harvard psychologist Steven Pinker has a fascinating idea: People get nicer over time.

Throughout history, most societies have become more peaceful and compassionate, more cooperative and tolerant. War, violent crime, discrimination and tyranny have all plunged over time. It’s “the most important thing that has ever happened in human history,” Pinker writes.

You can see the trend hitting financial markets with the growth of socially responsible investing.

Mutual funds investing in socially responsible companies — those passing a screen of environmental, social and governance tests — have exploded from $641 billion in assets in 2012 to nearly $2 trillion in 2014.

It’s one of the biggest trends in investing. Investors don’t just want a high return. They want to feel good about investing in socially responsible companies.

But there’s a problem: Everyone has a different definition of what’s socially responsible.

Take a look at some of the companies in Vanguard’s FTSE Social Index fund. This is supposed to be a professionally curated list of America’s most responsible companies:

Source: Casa Grande Dispatch (link opens in a new window)

Impact Assessment
corporate social responsibility, impact investing