5. Social, ethical, and religious issues INTRODUCTION Socially responsible investing with social, ethical and religious issues in mind encompasses an even wider spectrum of considerations than environmental issues. Studies have shown that investing behavior is influenced by morality, and not just economic rationality and profit (see Hofmann et al. 2008). SRI is an attempt to harmonize both, leading to common terms like ‘doing well by doing good.’ Unfortunately, for some people the term ‘socially responsible investing’ is still considered to be the same SRI financial products from the early years, when most SRI portfolios were merely mirroring the values and beliefs of specific religious organizations. However, modern-day social investing strategy has evolved, becoming more than just following religious protocols. It has incorporated individual moral and ethical beliefs. Socially responsible investors are now insisting that their investments be a reflection of how they view the world and how they can advance social progress. This change has translated into unique SRIs such as community investing and microloans. However, social considerations have also become risk factors, as we shall discuss later in this chapter. In this chapter, we first provide a brief history of religious-based SRI and its evolution to modern-day SRIs. Then, we discuss common social criteria of SRI, which include religious and human relations practices. We end the chapter with examples of conflict and community relations as considerations for operational, reputational, and regulatory risk in SRI investments. History of SRI SRI strategies are not a new phenomenon and are rooted as...
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