Home » sin stocks » Socially Responsible Investments (SRIs): 50 Shades Of Grey

Socially Responsible Investments (SRIs) sound great. And they are a MASSIVE growth industry in the financial space. Between 2012 and 2014, they grew 76% to $6.57 trillion under management (as reported by BankInvestmentConsultant).

But there’s a problem: We all define social responsibility differently: Alcohol, gambling, and tobacco are often thought to be the BIG BAD THREE sin stocks to avoid. But what about wineries? They’re alcohol stocks but maybe not as “bad” as distilleries. And what about prisons? They’re profiting from crime in a role that people often think should be done by the government. (None of this is new to regular readers of SinStocksReport. In fact, we recently talked about this in an article entitled The Fallacy of Ethical Investing).

Bottom line: Socially Responsible Investing is a grey area because it’s defined differently by everyone. And there are many different definitions. In the article on BankInvestmentConsultant, they quote an advisor with FNB Investment Services who says:

[quote]With the mutual funds, what I find really difficult is what’s socially responsible for one person might not be socially responsible to another. And as an advisor, I can choose to be very well versed in a few mutual fund companies, but I can’t be well versed in all the funds out there.[/quote]

While ethical investors TRY to invest according to their convictions, they’re often forced to wade through a massive selection criteria of ethical investments and start deciding how they really feel about their ethics — is whiskey bad but wine good? What about restaurants that have slot machines in them? What about payday loan companies? What about gun manufacturers?

Each one is a grey area for socially responsible investors. And there are 50 shades of grey… or perhaps 50,000,000 million shades of grey.

Read the full article at BankInvestmentConsultant.


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