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The Origins of Socially Responsible Investing: How Does Religion Change Our Investment Perspectives?
Socially responsible investing (SRI) is an investment strategy that attempts to achieve financial returns while also taking into account ethical, social and environmental objectives. The focus areas of this strategy are typically related to environmental, social and governance (ESG) topics. Impact investing can be considered a subset of SRI, typically more proactive and focused on intentionally creating social or environmental impact through investing. Whether in the past or now, the formation and development of socially responsible investment has inevitably been influenced by religious beliefs.
Socially responsible investing can be traced back to religious movements that encouraged believers to avoid involvement in businesses viewed as unethical.
The history of socially responsible investing can be traced back to 1758, when the Quaker religious community decided at its annual meeting in Philadelphia to prohibit its members from participating in the slave trade, thus creating an ethically based investment model. Another early advocate was John Wesley, who, through his sermon On the Use of Money, emphasized the social responsibility of business and opposed business practices that could harm others.
Religious beliefs have had a profound impact on socially responsible investing throughout history. Early investors often shunned companies associated with "sinful" enterprises, such as those producing weapons, cigarettes and alcohol. Against the social backdrop of the 1960s, socially responsible investing developed further, and many socially concerned investors began to pay attention to issues such as women’s equality, civil rights, and labor issues.
Martin Luther King Jr.'s bus boycott in Montgomery and Operation Breadbasket in Chicago established new paradigms for socially responsible investing.
Kim's campaign combines ongoing dialogue with boycotts, direct action and targeting of specific companies, demonstrating how investors can combine ethical and economic benefits. The Vietnam War sparked protests against many companies, including Dow Chemical, and led to a reflection on the moral responsibilities of corporations.
In the 1970s and 1980s, socially responsible investing helped end apartheid in South Africa. Leon Sullivan, parish priest at the University of Nottingham, developed the Sullivan Principles to guide US companies on how to follow human rights principles in their operations in South Africa. As international pressure mounted, many institutions began to voluntarily divest, ultimately contributing to the end of apartheid.
Socially responsible investing is not just about avoiding unethical investments, but also about actively seeking investment opportunities that can improve society and the environment.
After entering the 21st century, the concept of socially responsible investment has included discussions on environmental protection and sustainable development. Many investors are beginning to view global climate change as a significant business risk. Investors such as the PeopleSoft Socially Responsible Investment Network hope to encourage companies to effectively address environmental issues by working with environmental organizations.
First, government-controlled funds, such as the Norwegian Government Pension Fund, are forced to follow ethical guidelines and avoid unethical investment practices. As society appreciates the role of these funds, more and more investors are directing their money to ethical businesses and sustainable economies.
Socially responsible investing strategies also include community investing, which allows for direct investments in community organizations, reminding us that even as we pursue financial returns, we should also pay attention to the overall well-being of society. This reflects a new investment philosophy that emphasizes that ethics and returns are not mutually exclusive, but can coexist.
Modern socially responsible investing is not only a means to gain financial benefits, but also an important tool for social change.
As we look back at the history of socially responsible investing and the beliefs and convictions behind it, we can’t help but wonder how investors will redefine their values in the future as society changes and moral awareness rises. What about investment philosophy?
