Investing on My Own Terms: A Definition of SRI

Somewhere along the way, an industry becomes defined by the terms used to describe it. And then sprouts a descent saying that the original terms are somehow skewing the real meaning of what the industry does, or perhaps, unfairly paints another industry as not being what the new industry says it is. Such is the case with socially responsible investing (SRI).

Looking around the Internet, you will find that SRI has become the de facto term for investing your money for both financial and (purportedly) social return.  Whether by avoiding investments in companies that one dislikes (i.e. Altria (MO), Northrop Gruman (NOC)), purposefully investing in companies that one likes (SunPower (SPWR)) or investing in companies that are changing the social responsibility game for their industry (Nike (NKE), Starbucks (SBUX)), SRI is the name of the game in much of the media these days. 

But is SRI really the term for this way of investing money? 

Some people think SRI implies that other investors are socially irresponsible – a debatable issue, but not necessarily untrue.  Others believe that, given the varied ways to invest responsibly, the whole industry would be better referred to as socially "motivated" investing.  Therefore, the person who is a vegetarian and can not conscionably invest in a leather company fits into the same industry as the environmental investor who wants to support clean energy.  Others prefer "double bottom line" investing, which indicates what an investor expects from the investments, rather than why they are investing or what type of companies they are investing in. 

The discussion of terms may seem nitpicky and irrelevant.  But language is power, both in terms of how we use it and how others use it towards us.  By defining our terms, for ourselves and for others, we provide ourselves with principles and goals. 

If I am a socially responsible investor, perhaps I care most about denying my funding to companies that are irresponsible in my eyes.  As a double bottom line investor, perhaps I care most that I see both financial and social return.  If I can decide what my intentions are, then perhaps I have found the right place to start researching efforts to invest according to a style and moral compass all my own.