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When people talk about investment decisions, their minds tend to go straight to yields, interest rates, tax breaks and so on. All of that is important, of course it is. But it also takes a very narrow-minded approach.

The Oxford English Dictionary defines investment as “An act of devoting money, time, effort, or energy to a particular undertaking with the expectation of a worthwhile result.” When you think about it like that, there’s more to investments than simple financial yields.

SOCIALLY RESPONSOBLE INVESTMENT

Of course, it doesn’t have to be an either / or.  There is nothing wrong with making money and at the same time, generating broader “worthwhile results.” This is where socially responsible or ethical investment comes in.

Essentially, it means choosing the composition of your investment portfolio on the basis of deeper considerations than mere financial performance. Specifically, social investors look at companies that run their businesses in socially responsible ways. Or that contribute to specific sectors that are of importance to the investor. For example, these might be in environmental sectors, healthcare or social justice.

NO RECENT INVENTION

It might sound very idealistic and new age. Yet the notion of socially responsible investment is as old as the hills. Around 300 years ago, the Quakers, took a stand against the slave trade and boycotted investment in any kind of weapons. In 1750, the early Methodist leader John Wesley wrote a sermon that is still quoted today. In this he said it was a sin to make a profit to the detriment of your neighbour’s welfare. These could reasonably be described as early versions of socially responsible investing in action.

More recently, over the early part of the 20^th century, we have seen numerous examples of investors who refuse to go near what are known as the “sin industries”. These include alcohol, gambling, tobacco and the like.

The only real difference is that today, we have more freedom to make our own decisions about what sectors we wish to include or exclude. According to our personal values and beliefs. In the 21^st century world these might include the following:

• Green investors select businesses that use renewable energy and actively manage their carbon footprint.
• Social Justice advocates refuse to invest countries that have an unacceptably poor record when it comes to human rights, or ones who do not provide adequate and safe working conditions for employees.
• Peace investors take a leaf from the Quakers’ book and do not invest in companies that manufacture weapons or that profit from wars.
• Health conscious investors might avoid companies in the alcohol or tobacco sector, or businesses that are involved in areas of research that they feel could be harmful, such as GM crops.

OPEN TO INTERPRETATION

These are just a few examples. The point is that words like ethics and morality are open to far wider interpretation today than they were in the days of John Wesley. It is down to every one of us to decide how we define what is right, and exactly what sort of “worthwhile result” we want to see from our investments.