Socially Responsible Investing

Although SRI has evolved into what has been termed as "a full-blown industry of its own," the concept and its application remain controversial (Bennett, 1992, p. 46, 48). The concept of a social responsibility for business firms continues to be resisted by many corporate managements, at least at any level of action other than public relations (Moskowitz, 1992, pp. 71-75). Other corporations, however, are finding that socially responsible actions are leading to improved profitability (Labadie, 1991, pp. 32-35). Some economists support those corporate managements that resist the SRI concept. In this context, Nobel Prize winner Milton Friedman (1982, p. 133) said that:

The view has been gaining widespread acceptance that corporate officials . . . have a 'social responsibility' that goes beyond the interest of their stockholders . . . This view shows a fundamental misconception of the character and nature of a free economy. In such an economy, there is one and only one social responsibility of business--to use its resources and to enga

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ome and consumption are expected to rise over time, "it is natural to value present consumption more highly than the same absolute amount of consumption benefit" at some future time (Thirlwall, 1992, p. 192). Some economists contend, however, that, if government legislation forced all members of the society to sacrifice--to protect the environment as an example, people would eventually be willing to make such a sacrifice because they would see positive outcomes, and they would see that all members of the society, not just themselves, made the sacrifice. If the basic assumption of this approach is accepted--that forced savings and investment would cause individuals to recognize the benefits of transferring real income from the present to future generations, the implication is that it is "necessary that all individuals' real income level enter the utility function of each" (Winch, 1991, p. 165). This implication means that . . . . utility functions be interdependent in the sense that a change in the quantities of goods and services available to one person will make others feel better- or worse-off by reason of their feelings of altruism or envy. This is an interrelationship among utility functions quite different from the gene
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Approximate Word count = 8893
Approximate Pages = 36 (250 words per page)

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