Social responsible
investment becomes a new trend in modern economy.
Responsible investing
mentions about the companies, who consider factors of environment, society,
governments and ethics while producing their products or services. The social
responsible investment now is moving to the centre of institutional and private
investors’ activities.
Number of
organizations applied SRI increased remarkable especially in Europe. The
responsible investment assets in EU increased average 42% between 2005 and
2007, meanwhile the growth in US was at the rate of 9%. Significantly, Canada
seems to be the nation applied the SIR most widely with nearly 20% of assets
under management in Canada.
So, social responsible
investment: does it really bring profit to business???
First of all, it is
necessary to mention about the demand of investors as they show more concern
with environmental, social and governance issues, and they encourage a
combination between business’s return and social responsibility. Investors seem
to use their money to earn more profit while still contribute for a more
sustainable world. And, SRI enables investors to choose investment, which are
consistent with both their financial goals and personal values.
So, in my point of
view, applying the SRI brings not only the profit, but also other benefits to
any organization. They are the high return, achievement of investors’
expectations as well as the reputation in the market. The higher level of
satisfaction the organization brings to investors, the more fund that they will
invest in the firm. On the other hand, building the organization with a
responsible image, which associates its activities with society, also increases
the firm’s value in customers’ eye. People will choose the business due to
their trust reputation.
My idea seems to be
supported by other Professors as they affirm a positive correlation between the
social responsibility and financial performance. Authors owell, Hart and Young (2000) and Konar and Cohen (2001) suggest that
firms that adapt strong global environmental standards have higher market
values.
There is an example of News of the
World (NoW), who damages its image with a social phone- hacking scandal. It is
reported that more than 4,000 people were hacked by the NoW.
Action of the organization is
totally illegal, against the law. Reputation of the firm consequently was
suffered significantly as it must issue an apology for this “serious
wrongdoing” in public channel. It also leads to the decline in sale of the
organization, as it is not a trustworthy organization in customers’ eye
anymore.
Through the situation of NoW, people
can see the power of SRI in performance of any organizations. Following this
new trend brings benefits to your business.
