Socially Responsible Investment: How to Invest in Stocks You Can Feel Good About

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socially responsible investment

The emergence of user-friendly Internet stock trading has made investing a real possibility for even the most fiscally and technologically-illiterate among us. And with the economy getting back on its feet, more and more market-curious Americans are finally finding themselves in a position to invest. Thankfully, there are countless tracking tools, reports and predictions floating around on the web to help us make financially sound choices. What’s not so easy is finding investment opportunities that are socially responsible.

Many of us simply don’t want to invest our hard-earned capital in fossil fuels, environmentally irresponsible industries, or corrupt corporations for moral reasons. So how do you find investments that will work for you and also align with your personal set of ethics? You’ll have to do a little more pre-investment research work than the average morally-blind investor, but it is possible to find investment options that can make money without contributing to environmental destruction or working-class poverty.

Invest in Alternative Energies

The first step is to understand exactly what you’re investing in. Alternative energies, for example, are a big win-win. You’re investing in a company that’s going to help the environment, but there’s also a good chance of making a return on your investment as the alternative fuel industry continues its rapid expansion.

Of course, I only mention alternative energy as a single example. Don’t limit your search to companies that are developing “green” solutions for automobiles and heating. It helps to think outside the box. One interesting option is Cree, Inc. (NASDAQ:CREE). They’re in the business of developing solid-state LED-based lighting technologies. It seems insignificant at first, but LEDs are far more efficient and environmentally-friendly than traditional tube lights, making Cree an attractive option for environmentally conscious investors.

You have to be careful. Don’t invest in a company just because their corporate website claims they’re responsible; check with independent researchers.

Consider the People Behind the Companies

It’s not just about what products or technologies you’re investing in; you have to consider the people behind the companies. Does the company allow their workers to unionize? Have they placed factories or subsidiaries overseas at the expense of American workers? What sort of political causes, if any, do they contribute to? What does their environmental compliance record look like? There are a lot of factors to consider before making a socially responsible investment choice.

If you’re intimidated by the level of research needed to make socially responsible investment choices, you might consider investing in a socially responsible mutual fund instead. When you invest in a mutual fund, you’re basically trusting somebody else (a professional) do your research and invest your money for you. There are several mutual funds out there that promise to only invest your money in conscientious businesses.

Socially Responsible Investment

If you’re ready to begin your research, or you want more information about socially responsible investing, the US SIF (ussif.org) is a good web resource.

In the end, playing the stock market is always going to be a compromise between financial benefit and social integrity on some level. Let’s face it: if you want to play the big-money game with the big-money boys, you have to buy in with a little piece of your soul. But you certainly don’t have to throw away your entire moral code just to make a stable investment.