Introduction
In the modern economic environment, investment remains a major option for many people. However, despite the many investment options available in the market, not all investments are socially acceptable. For example, in some countries companies dealing with tobacco are barred from publicly trading their shares due to the negative social effect tobacco has on the society. The success of society we live in depends on the contribution of each one of its inhabitants. Many investors have been searching for information in a bid to understand the concept of social investing. Even as the talk on social responsibility dwells on corporate level, it is the responsibility of the individuals to ensure that the cleanliness and conservation of environment are maintained at all times. This can be achieved through making financial decisions that include not only personal development, but also environmental and social concerns commonly referred to as green investment.
Main Body
In a bid to get to understand how the concept of social investing is entrenched in the society, I asked my brother, David and my long term friend Abel for their opinion on the topic. David has been investing heavily especially in the money market and automobile industry but he has never thought of social investing. His understanding was that, social investing solely meant big companies giving back to the community through community projects but never thought that an individual would have been in a position to be involved in social investment. However, he intimated to me that he has established a tree nursery and has planted trees around his vast land but never considered the action as a social issue.
On the other hand, Abel has a clear understanding of social investing and has been actively involved in the environmental conservation programs in the community as well as being a committee member a social group that aims at educating members of the community especially the youth on the effects of drug abuse. In addition, he has been actively involved in campaign against advertisement of tobacco and alcohol products in the media citing the harmful threats such advertisements pose to the society.
The subject of social investment is broad in scope and may range from the attempt to address issues appertaining to ecosystem by both individuals and companies, to the fair business practices exercised by some individuals or companies. According to MacDonald (2004), most industry players strive to attain the highest rate of return from investments by externalizing costs to the environment, workers and other persons thus causing social injustice and environmental degradation. In addition, transparency and standardization is required to screen out companies misusing their property rights without minding the effects they cause to the society. For example, companies may invest in manufacture of plastic products but fail to invest in technology to dispose or recycle the same products after their use, thus causing environmental hazard. The same can also be said to companies that produce inferior quality goods whose effect on the society is dissatisfaction.
Social investing, unlike economic investing involves setting up social goals based on social factors. Some of the investment goals may initially be aimed at attaining economic results but in the process tend to produce social results. For example, creating employment may be an economic goal of a company as it strives to earn profits, but a closer look at it tends to draw a social effect due to the implications it has on the life of the individual employed as well as to the lives of those dependent to him. According to Bruyn (1991), structures of accountability may be incorporated in the organization to enable solving social problems without interfering with the conduct of business. This means that the organization will create social value to the community while at the same time pursuing its own goals. For example, an investor may invest in tree plantation with an aim of future cash flows from the harvest of the trees, yet the same trees will have social effect during the time they will be in existence such as soil conservation, water harnessing and air purification. It therefore follows that, David, although he was just trying to make an economic investment by planting trees in his farm expecting to reap financial benefit in the future, he was unknowingly socially investing.
For a company to be socially responsible, it needs to give back to society from whom it derives its business. One way of doing so is through donating to nonprofit making organization which in turn works closely with the community to solve the various social problems affecting them. In modern society, most of the large corporations have established their own foundations as separate entities or subsidiaries and factor them in their budgets for dealing with society related activities. According to Weeden (1998), corporations are recognized for their social involvement in the society, yet there is a social factor, employees’ volunteering, that has always been sidelined despite the critical part it plays in creating social welfare.
Conclusion
Social investment therefore is an activity that should be undertaken by both corporate as well as individuals to ensure the environment and other aspects in the society are well taken care of. This process also creates cohesion in the community as well as improving the lifestyle of the community. Financial sacrifice for the benefit of social welfare may seem a daunting task to an individual, but the benefits that arise may over exceed the benefits realized from economic investment.
References
Bruyn, S.T. (1991). The Field of Social Investment. Cambridge University Press.
MacDonald, J. (2004). Has social investing lost its way?
Weeden, C. (1998). The Breakthrough Strategy for Giving and Getting. Berrett-Koehler Publishers.