Does a Socially Responsible Investment Increase Portfolio Value?

An investment that is considered socially responsible is based on the nature of the business any given company conducts. There are a few main themes of socially responsible investing including fielding investments in companies that sell or support gambling, alcohol and tobacco. Another theme of this practice is to look to invest in companies that are focused on energy conservation and clean technology. Socially responsible investments can be made in individual companies, mutual funds or an exchange traded fund.

I see many advantages to making socially responsible investments in companies and believe it to be an asset to a portfolio. The investor’s financial needs and an investment’s potential impact on society are taken into consideration during this process. I believe that companies will be more successful in the long run if they change their investing strategies to keep up with the changing global economy, thus changing from investing solely based on numbers to investing in companies that are looking out for the best interest of society.

The amount of companies that are turning to going green and clean technology movements is increasing, which will increase the attention of consumers to these companies. Consumers will then begin to purchase more and more from companies that seem safe and can be trusted. For example, a family with young children will be less likely to remain loyal to a company that is receiving bad press for accidental deaths from their products, or any given tobacco company that is constantly in the news. These families will want to set good precedents for their children, trying to avoid companies that are seen in a negative light. Therefore, it is wise for investors to add socially responsible companies to their portfolios because although the growth may be small of energy focused companies, historically it is a positive trend. Socially responsible companies are less likely to see a downturn in profits due to negative press, unlike alcohol,...