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 Obstacles to Socially Responsible Investment

Socially responsible investment can have many obstacles at the organizational level. Firstly many people misunderstand the term. They think it to be sentimental. They even think that social responsible investment is an act of pleading or pleasing others
Even if this misinterpretation is sorted out it takes some time for companies to implement the process of social responsible investment especially if they do not have any prior experience in this area.

Some of the obstacles to socially responsible investment are as follows:
Financial Constraints
Companies should have adequate funds to invest for social responsible causes.It is advisable to use a portion of reserve for this purpose. However some companies think of social responsible investment whether or not they have surplus funds. They make the mistake of spending for this even if the resources are not sufficient enough to maintain their day to day needs. Such an act will only put the company into jeopardy.

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In such a position it is not advisable to think of social responsible investment if the company unless the company is double assured of monetary returns adequate enough to meet their costs. The company should go for this step only when the social responsible investment is inevitable. For e.g. if there is a dreadful disease in a country pharmaceutical companies can think of producing life saving drugs even if they do not yield profit , provided they are able to recover their expenditures at a later stage. But a mediocre company should not think of spending expensively on welfare programs with an intention to merely garner the attention of public.

Discouragement

Social responsible investment is not usually encouraged by everyone in the company. When a company drafts or brings up a proposal to incorporate social responsibility there will be stiff opposition from various quarters like finance department and shareholders. It is no exaggeration to say that even several board members have been and are still vehement to it. If this anti incumbency factor is not set right or curtailed in the appropriate time then the company is bound to incur losses out of social responsible investment because the steps and systems set for social responsible investment will not be implemented effectively due to apprehensions.
External Factors
As said earlier there are certain factors are beyond the control of the company. For e.g. if the public are not convinced about the social responsibility measurements irrespective of the efforts taken by the company the company may not be able to make any benefits out of social responsibility investment. Similarly the government policies and competitors move or any other negative external factor can cause a great havoc.

The phenomenon of socially responsible investing is gaining acceptance among companies all over the world. This is evident from the fact that several companies have set up huge funds to be spent exclusively for this purpose. Moreover there is lot of emphasis on the accountability of these funds. Some companies even advertise their social responsibility measures and consider it as their key feature. Social responsible investment management is also given equal priority.
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