Investing with the Planet in Mind: Socially Responsible Investment Tips

In today's economic and cultural climate, many people are realizing that it is important to invest with an awareness of social issues. The concerns might be geared around the environment, animal rights, or a wide variety of socio-political issues currently being brought to the forefront of the news. The modern investor is no longer interested in supporting a company that exploits and uses people and the planet indiscriminately. So, if you would like to invest in the stock market, but would prefer to avoid companies that poison the planet with harsh chemicals, utilize child labor, or practice other unpleasant behaviors, here are some tips to consider.

Know What You're Investing In

The first thing you should do is to become aware of how to investigate a company. While traditional investing would focus on things such as P/E ratios and EPS estimates, the modern investor who is socially conscious will want to look into the companies track record on social issues. This involves more extensive research. You should look for any lawsuits taken against the company in the realm of environmental or human rights offenses. There are online clearinghouses which are great starting points for this research; you can always do a deep Google search on the issue if you need more information. 

Choose Individual Stocks Over Broad-Based Index Funds

One of the problems with buying an index fund is that these funds are comprised of so many different stocks. That is normally a good thing for investors as it displaces risk. However, it also increases the amount of research necessary. An index fund might contain several hundred stocks. It would be a full-time job to do an analysis of all of these funds and determine if they are socially conscious. Instead, focus on the stocks of firms that you already have investigated. 

Locate a Socially Responsible Investment Advisor

You could also consider working with a socially responsible investment advisor. These people are going to be able to provide you with a list of investments that fit your criteria. They have access to resources that cull through thousands of companies and seek to find investment opportunities that are in alignment with whatever particular sector their clients are seeking. This includes renewable energy investments to trans-national companies that are committed to paying a living wage to their workforce. These investors might even have access to ETF funds specifically created for socially conscious investors.