What Is Green Investing: Historical Overview of Socially Responsible Investing (SRI)
Religious investors are generally considered to be the first socially
responsible investors. In the early days of investing,some churches
kept investments out of "sinful" industries. In the 1960's and early
1970's, many religious institutional investors were looking to invest
their money wisely for the future without abandoning their beliefs.
Interest grew during the 1970's and 1980's when South African
divestment greatly expanded the notion of SRI. A solution for investors
was to analyze the companies in which they invested not only for
financial performance, but for their social and environmental
performance as well. Often, companies that had poor records on these
issues were excluded, or screened, from consideration. Sometimes,
entire industries were also excluded from investment if the operation
of these industries violated the investor's principles. The tobacco
industry was one of the first industries to be entirely excluded from
some investors' portfolios. This type of screen is known as a negative
screen because it excludes those companies that fail to meet an
investor's criteria.
Over time, more and more mainstream investors chose to
invest responsibly, as many people came to believe that investing
responsibly was not only a moral imperative, but also a powerful tool
for changing the world. Positive screens were created so investors
could identify those companies that they wanted to support as well as
those that they wanted to avoid.
In addition to the selection of companies, some investors became more
active owners of the companies in which they invested. These investors
used shareholder advocacy to encourage corporations to change their
ways.
We believe the anti-apartheid movement was a watershed for responsible
investors because encouraging divestment in South Africa was one of the
first major shareholder campaigns.
Through the years, the responsible investing movement has continued to
grow. The Social Investment Forum (SIF), an association of socially
responsible investing firms and professionals, states that at the end
of 2002 over $2 trillion was invested according to some responsible
investing criteria. According to SIF data, the industry continued to
grow faster during 2001 and 2002 than mainstream investing channels,
while the broader universe of professionally managed portfolios fell
four percent.
As we stand in the early years of a new century, we believe responsible
investing is an idea whose time has come. In our opinion, the industry
is poised to continue to grow and increase its ability to change the
world in positive ways. Green Century Capital Management is committed
to being part of this growth, and to using the power of its role as an
investor to protect the environment for all of us and for future
generations.
