Topic: Business

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In the current financial world and economic systems, where profit and return on capital are priorities of many business entities, the vehicles used by to achieve the monetary objectives have been disregarded. Investors have managed to access different areas of world economy due to availability of mutual funds. Perhaps, social investing is a buried concern for a long time. It is disturbing that some products produced by a firm become payload in the society. For instance, the manufacture of weapons involves a tidy return to the investor, but they eventually become payload in other parts of the global economy. Social investing is a modern investment which considers the impact of the investment on the society and the global economy as a whole, and investor’s financial needs. Financial is a fiscal responsibility and it is interconnected to social investing technique in the sense that the investment has to meet both social and economic objectives. Social investing involves directing individual money to financial securities that concurs with personal social attitudes. The concept underlying this modern investing is that any investment decision made should embrace corporate responsibility and societal effects. One’s investment alternatives in financial securities should be socially acceptable. It is an ethical principle for business firms to engage in business activities that do compromise the health and the safety of societal members. Social investing should conform to specified ethics i.e. moral standards by which society judges businesses. Social investing reflects political, religious and environmental beliefs (Camejo, & Aiyer, 2002).

Social investing calls for an effective investment process. The investment process should incorporate wide range of factors that influence investor’s ability to accomplish above-average consistency in the hallmark of its high-quality philosophy. The common factors influencing investment process in social investing includes secular shifts, macroeconomic and investor’s specific factors. The social investing process involves:

Screening: It involves evaluating various investment portfolios based on good governance, social and environmental criteria. It encompasses strong entity’s social responsibility and seeking for alternatives that would eradicate poor business performances. Investment lists may include business corporations and enterprises with strong environmental practices, safe and useful products, good employee-employer relationships and business operations that violate human rights in the society.

Social analysis: The investor has to extensively examine and analyze companies with both attractive financial and social characteristics. This is done while considering community or societal values that influences investment.

Portfolio construction process: This entails identification of economic factors that affect economic prosperity of major industries and sectors. This will enable an investor to ascertain investment portfolios that would probably generate profits and returns on capital invested (Richard, 2008).

Behavior of the companies and the impacts on their constituencies are major concern of many investors pursuing social investing in the global economy. Social investing technique provides a way for investors to act on their concerns. As a viable investment approach, social investing guarantees competitive investment returns. This is attributed to the fact that investor’s money is well managed in accordance with social and environmental principles and values. Under social investing technique, an employer has to adopt a fair approach of recruiting and developing employees, and this would help integrate businesses into the society and improve their reputation (Richard, 2008).

The current global economic environment is characterized by the emergence of new types of investing. Green investment has been overwhelmingly appreciated in most societies. It involves investing in corporations or companies which actively improve environmental conditions through introduction of modern technologies. Examples of green investing includes green stocks, green bonds, green saving accounts, green mutual funds, green market accounts and green certificates of deposits among others. In the current economy, many investors prefer investing in stock as opposed to other forms of green investing. From business point of view, a stock refers to a form of security which offers fixed interests. In the 21st century, the emergence of Responsible Real Estate (RPI) investing has attracted attention of investors globally. This is a voluntary action by an investor to go beyond the predetermined legal requirements to promote positive social and environmental effects of their real property in consistent with individual fiduciary responsibilities (Amy, 2001).

The former type of investment is more suitable than the later because of the fact it incorporates the aspect of social responsibility through improving environmental conditions. The companies involved in green stocks, green market accounts and green bonds have to embrace new technologies with intent of improving the environment (Amy, 2001).

Recommendations

Social investing has had tremendous effect on business around the world. It is a powerful emerging trend in the society currently, and it affects investors’ decision. The technique allows both private and public investors to align their values with their financial objectives which would promote better profits and returns on capital investments. Social investing is highly recommendable because it enables an investor achieve business objectives while catalyzing positive modifications in business world. The technique is very useful because it help the players in the business world create a just, healthy and sustainable business environment. Scheuth (2010) also supported social investing concept as evident by his sentiment:

“All investing is future-oriented; sustainable and responsible investing is even more so. Socially conscious investors seek to secure their own financial futures while directing investment capital toward a more just, sustainable, and healthy society” (Schueth, 2010). Basically, it is more than a trend; it is a wave that has deposited investors on the shore of bright business world.

References Lists:

Amy. L. (2001). Socially Responsible Investing: Making a Difference and Making Money. NewYork: Dearborn Trade.

Camejo, P. & Aiyer, G. (2002). The SRI Advantage: Why Socially Responsible Investing hasOutperform. USA: New Society Publishers.

Richard, B. (2008). Investment Process. Retrieved June 12, 2010, from

HYPERLINK “http://www.calvertgroup.com/NRC/literature/documents/IP10919.pdf?litId=IP10919” http://www.calvertgroup.com/NRC/literature/documents/IP10919.pdf?litId=IP10919.

Schueth, S. (2010). Socially Investing in United States. Retrieved June 12, 2010, from

HYPERLINK “http://www.firstaffirmative.com/news/sriArticle.jsp” http://www.firstaffirmative.com/news/sriArticle.jsp