You are not alone if you haven’t heard of Corporate Social Responsibility (CSR). This idea stems from the belief that companies should act responsibly in the communities and environments in which they operate.
Examples of CSR include companies taking actions to protect the environment, promote human rights, and provide equal job opportunities. Companies can also take steps to enhance educational opportunities or advocate for the rights of women and minorities.
Roots of Socially Responsible Investing
Socially responsible investing in the United States is believed to have roots that extend over 200 years. This is attributed to the money management practices of Methodists. Others point to ideas that Jewish investors have long advocated.
John Wesley, the founder of the Methodist movement, urged his followers to avoid profiting at the expense of their neighbors. They avoided partnerships or investments with those who made their money from alcohol, tobacco, weapons, or gambling. These investments were sometimes referred to as “sin stocks.” These actions established screens for social investing.
Socially responsible investing practices are commonly associated with religious beliefs.
The 1960s
Dissatisfaction among students and youth led to protests against the Vietnam War in the 1960s, as well as boycotts of companies that supplied weapons used in the war. Issues of human rights and racial equality grew in importance.
Community development banks established in low-income or minority communities were part of a movement that pushed for the Civil Rights Act of 1964 and the Voting Rights Act of 1965.
The 1970s
Social activism spread to issues of corporate labor management in the 1970s. Environmental protection also became a concern for more investors. The first Earth Day was celebrated in 1970. Concerns many activists had about the threat of pollution from nuclear power plants escalated as the decade progressed, culminating in the Three Mile Island nuclear plant accident.
The 1980s
Progress in socially responsible investing continued during the 1980s, most notably through efforts to end the apartheid regime in South Africa. Individual and institutional investors withdrew their funds from companies operating in South Africa.
Investment decisions by churches, universities, cities, and the U.S. led many American companies to divest their operations in South Africa. This contributed to economic instability within South Africa and ultimately aided in the collapse of apartheid.
The 1990s
By 1990, there was enough of an outbreak of socially responsible investment funds and growth in the popularity of investing as an investment approach to justify a benchmark for performance measurement. The Domini Social Index, consisting of 400 large-cap U.S. companies, was launched in 1990, compared to the S&P 500.
Companies were selected based on a broad array of social and environmental criteria, providing investors a standard to measure screened investments against their non-screened peers.
Responsible Investing in the Millennium
There is an acceleration toward positive approaches to sustainability challenges embraced by socially responsible investors. These modern approaches include impact investing and the mainstreaming of sustainable investing. It continues to evolve.
You can expect businesses and companies to address their impact on social issues as social challenges continue to emerge. Some additional concerns include income and wealth inequality, climate change, pollution, and corruption, to name a few. Their positions will strengthen in the future. More investments will be designed with these issues in mind as sustainability and corporate social responsibility continue to add value perceived by consumers and investors.
Source: https://www.thebalancemoney.com/a-short-history-of-socially-responsible-investing-3025578
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