Question

What is the significance of this increase in socially responsible investments? Do you think SRI practices would grow in popularity if they did not provide a good rate or return to investors? Would you expect these types of investments to be riskier than others? why or why not?

Answer 1

Answer-) Socially responsible investment are the investment done in companies or institutions which are involved in creating social values and are ethical like Companies which provide necessary skills or training to its Employees whenever required, Companies which are into renewal sources of energy, institutions which are based on moral value and think out the customers before profit. The significance of this increase in socially responsible investments is huge where people are investing less in companies which manufactures unethical products like cigarettes , tobacco etc and more into Sustainable Companies that provides a better future for the society. This type of investment is better for the environment and also provides a return on interest. Its significance is that Companies provide employment in the rural areas by which GDP of a country grows, less investment in alcohol or tobacco industry will result in less production and less consumption by which people can be more Focused into their work and live a healthy life. By using renewable sources , pollution would also be reduced by which environment will flourish and people can be stress free and breathe in fresh air ,thus the whole economy will boom and the nature will also be more greener.

If we talk with investment mind set, then every investor invests with the idea of good returns and if SRI do not provide good returns, it's popularity would cease to grow . There is two elements here , social well beings and good returns and an investor's objective is to generate returns and later comes the social conscience . We should consider the fact that different Investors has different social ethics for SRI such as alcohol or for meat products. So to evaluate the Social constraints , there are costs and if investors do not get a return on their cost, they may do not evaluate and choose a company which is unethical and more profitable

These type of investments are not riskier than other because the companies who practice ethical values take care of their customers and employees and build products which are ecological and environment friendly. Hence , they create a emotional touch with the public and people Generally tend to buy their products rather than choosing the products which are causing harm to environment. They build strong process by which Management is motivated and takes prompt decisions to be sustainable and profitable without any unethical means. Theese Companies are generally transparent and have a good reputation with the Customers by which their revenue increases year after year. So it's not risky than the othes.