Socially-responsible mutual funds (or Socially Responsible Investing, SRI) invest only in companies that meet the criteria of certain guidelines or beliefs. Most socially responsible funds don't invest in industries such as tobacco, alcoholic beverages, weapons or nuclear power. Socially-responsible mutual funds strive to get a competitive performance while still maintaining a healthy conscience.
Socially responsible mutual funds examine the social and environmental records of companies to determine which companies to include or exclude in an investment portfolio. Most social investors have certain set criteria they use to identify which companies "make the grade."
Sample criteria for socially responsible mutual funds might include:
1. Corporate governance and ethics
2. Workplace practices
3. Environmental concerns
4. Product safety and impact
5. Human rights
6. Community relations
7. Green Funds
8. Indigenous peoples' rights
It is becoming more popular to view social research as a way to identify companies with better managment and lower risk.
Shareholder activism is one of the most important issues for socially responsible funds. Shareholder advocacy often involves talking with companies on issues of social, environmental or governance concerns. Another key component to socially responsible mutual funds is the company’s investment within the community.
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