Investors Have Social Responsibility, too! Believe it!

A conglomerate should not exist with the sole objective of making profits. Socially responsible investment is another important issue. In simple words socially responsible investing is an act or set of acts whereby the company attempts to give back to the society who have been the root cause of their progress and have directly or indirectly contributed to their welfare.

How do Socially Responsible Investments Work?

Socially responsible investment aims at enhancing the goodwill of the company in the minds of investing public and others. It is expenditure on the part of the company. In return, the company not only assures of boosting image but also getting constant support from the public at times of crisis.

For instance if a company manufactures an essential commodity with very low profit margins the consumers will develop a strong liking for their products. This brand loyalty will help the company to easily promote other products as and when they are introduced in the market.

How are Socially Responsible Funds different from Other Mutual Funds?

Mutual funds are meant purely to generate revenues for the investors. Mutual funds work on the principle of sharing risks and profits. On the contrary social responsible funds are aimed at creating goodwill among the shareholders. The company envisages earning profits in the long run. Even if that is not achieved the company will be satisfied with the reputation and trust that it has created. There are some socially responsible mutual funds. Those socially responsible mutual funds also serve the public.

Is Social Investing Effective?

The success of socially responsible investing also depends on the attitude of management and employees. No doubt, certain external factors like competitors move, government policy, inflation and economic forces also act beyond their control. Social investing will definitely turn out to be success if everybody cooperates in the mission. However the success cannot be measured in terms of immediate monetary gains. In some cases it will take more than a couple of years for the company to reap the benefits. Therefore the effectiveness of social responsible investment cannot be decided by many factors. Many issues play a significant role in deciding this purpose and it is not possible to predict one common factor.

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