Socially Responsible Investing - Notatki - Investings, Notatki'z Ekonomia. Warsaw School of Economics
Henryka
Henryka24 March 2013

Socially Responsible Investing - Notatki - Investings, Notatki'z Ekonomia. Warsaw School of Economics

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W notatkach wyeksponowane są zostają zagadnienia z ekonomii: Socially Responsible Investing.
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Grzegorz Podolski nr albumu: 50864

Socially Responsible Investing

(SRI)

Over the past century western societies' wealth level grown rapidly. People started

to save substantial amount of money and the next step for them were to decide how they

would like their money to be used. The majority of investors wanted just to maximize

revenue from invested money but few of them decided, that their money should not be

used in the wrong way and they began to search alternative investment funds that would

guarantee that invested money would not be used as a source of funds for developing

weapons, non ecological friendly types of industry, speculative attacks etc. Even though the

fast development of Socially Responsible Investing took place in last century, the origins

of this movement may date back to 1758 when some groups of people realized that investing money in

slave-trading is highly unethical 1. SRI is investing money in way that focuses on revenue as

well as on social good. Nowadays investors has a full range of possibilities to invest the

money in the ethical way, some organizations began to concentrate ethical investment

funds to create complete and clear offer of these funds that can be introduced to potential

customers.

One of these organizations is FEBEA (Fédération Européenne des banques Ethiques et Alternatives) - a non for profit, European Federation of Ethical and Alternative Banks. The main

objective of FEBEA is to develop the ethical and solidarity-based finance in Europe in a concrete

way 2. FEBEA created the offer of alternative financial tools that guarantees investing only in projects that

develop societies, microcredits or financing entrepreneurs who works on social and solidarity economy and who often find it difficult to get financed by the traditional banking system.

Although the SRI is believed to bring much less revenue than typical ways of investing, it seems

that in Europe and United States of America it is becoming more and more popular. Assets aggregated on

SRI funds climbed from $0,63 trillion in 2003 to $2,71 trillion four years later. In 2007 every one out of

nine dollars under professional management in the USA is involved in SRI 3. The specialistsexplain such

a situation as a consequence of increasing of humans' ethical and political awareness. Increasing number of

wealthy people in North America and in Europe goes hand in hand with willing to help others and stop

1 http://en.wikipedia.org/wiki/Socially_responsible_investing 2 http://www.febea.org/why_febea.php 3 Social Investment Forum - '2007 Report on Socially Responsible Investing Trends in the United States'

world's cruelty. Europeans and Americans pay more and more attention to the international issues. They

don't want to support with their capital projects which includes e.g. child labor or weapons production even

though it takes place in poor countries far away.

Strategy of SRI funds can be divided into two different streams. First strategy is based on investing money only in branches that are commonly regarded as ethical and searching for companies

which manifest interests in global issues. The second strategy is refusing to invest money to the firms or

branches that are unethical or history of which shows serious abuses. Searching and investing in "ethical

companies" is much easier since 1999 when "Wall Street Journal" began to publish first global ethical index. After that stock exchanges created their ethical indexes: Great Britain (FTSE4Good), Brazil

(BOVESPA ISE) and till now many more countries 4.

There is also one more persistent question - which businesses are qualified as ethical ones and

which are unethical. Unethical branches are rather connected with phenomenon detrimental to societies such as: weapon industry, tobacco industry, alcohol production, gambling, financing wars, industries

that are using children as a cheap labor force. On the other hand, ethical businesses regard to actions

that have positive impact on societies, for example investing in: science research, medicine,

education, development of environmental-friendly production methods, revival of entrepreneurship in poor regions.

In Poland market of ethical investments funds is still less-developed. Our society is not very rich and we are still looking for businesses that simply guarantee the highest revenue-rate. According to Marek

Przybylski - the President of Aviva Investors Poland - SRI investment funds are answer for the higher

needs, which are appearing in Poland only after satisfying basic needs - after making profit. Currently

we're asking how much we can gain but we don't care in which way this profit will be achieved. But spirit

of ethical investments appeared also in our country. In 2009 first ethical investment fund in

Poland was introduced by TFI SKOK called: "SFIO Etyczny 1" but only over a dozen

million PLN has been invested in this fund, which locates the money in participation

units of big German ethical investment fund - "Oppenheim Ethik Bond Opportunities". Polish capital market has also offer addressed to the corporate clients - "Credit Suisse Fund (Lux) Christian

Value" - the only fund with official Vatican's certificate, but this fund also hasn't accumulated so much

capital 5.

To sum up, SRI is typical for well developed countries, where wealthy citizens are conscious that

typical investment funds maximize revenue by investing money of depositors in the most profitable

branches which are simultaneously very unethical in most cases. SRI market is booming in western

countries, where people disagree to finance for example weapon or tobacco industry. In Poland Socially Responsible Investing is in early phase of development and doesn't attract the interest of investors, but

observing situation in western countries we can predict that this market will expand in the future also in

Poland.

4 http://www.forbes.pl/artykuly/sekcje/sri/zyski-moralnie-niekwestionowane,3889,1 5 http://www.forbes.pl/artykuly/sekcje/sri/zyski-moralnie-niekwestionowane,3889,2

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