Socially Aware Investing

What is socially aware or socially conscious investing? It is investing only in stocks, bonds, and mutual funds that work in socially responsible areas, or that avoid working in certain areas. You can find mutual funds that don’t invest in companies with interests in Darfur, Sudan, or without tobacco interests, or that are not part of the defense industry. Or you can find companies that consciously try to make a difference in the world, investing all or some of their profits in charity and philanthropy and good causes.

Does all of this make a difference? By all means, make socially conscious investments if it makes you feel better, but don’t think you’ll make money doing it. You most likely won’t get a better return on your money, and there’s a small amount of evidence you’ll get a worse one. And it’s not especially likely you’ll see many results in the form of improved corporate behavior. For one thing, companies are more likely to listen to shareholders, so if you want to change a company, you’d be better off investing a small amount of money with them and attending shareholders’ meetings.

So it may be the in thing to do, but socially aware investing may not make the difference in the world you want it to.