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Strategic CSR & Social Accounting
Socially Responsible Investing (SRI)
Aside from the upcoming social standards, investors are transitioning and favoring companies who care about society. This is known as socially responsible investing (SRI). “In general, socially responsible investors are looking to promote concepts and ideals that they feel strongly about” (Chamberlain, 2013). According to Socially Responsible Investing: What You Need To Know (Chamberlain, 2013), investors accomplish this through:
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Investing in companies with paralleled values within ESG
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Shareholder advocacy—pressure entities into improving practices and policies and acting as a good corporate citizen, while simultaneously promoting long-term value and financial performance
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Community Investing
The goal of SRI is to promote or demote certain actions. Investors are not just investing with their head anymore—their also using their heart. From 2011-2012, SRI grew to nearly $4 trillion (Chaberlain, 2013). SRI ultimately enables investors to combine financial objectives with their social values (Ainscough, Hill, Shank, & Manullang, 2007). Research has shown that the earnings for such investments are not significantly different from earnings of other investments (Ainscough, Hill, Shank, & Manullang, 2007). “Investors seem to prefer to reward firms who display overall positive social behavior rather than to exclude firms on the basis of certain products or practices” (Berry & Junkus, 2013).
Below is a list of words and their frequency of appearance in research detailed in Socially Responsible Investing: An Investor Perspective that investors surveyed commonly associated with SRI (Berry & Junkus, 2013). These are the terms investors are referencing when determining which companies are acting socially responsible.
To the left is a chart by Berry & Junkus (2013) that shows the major categories that are associated with SRI by both socially responsible investors and general investors. The consideration for what makes a business socially responsible are generally the same, regardless of investor.
