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January 04, 2001
Book Review: Socially Responsible Investing
Social investment industry pioneer Amy Domini pens a new, comprehensive book on the whys and hows
of socially responsible investing.
SocialFunds.com --
When Amy Domini talks, social investors should listen. Her firm's Domini Social Equity Fund, a
social mutual fund that tracks the Domini 400 Social Index, has returned an average annual 20.83
percent over the last ten years. This is compared to 18.70 percent for the Standard & Poor 500
Index for the same period. Already the coauthor of several books touching on different aspects of
social investing, Domini covers all bases in her new solo effort "Socially Responsible Investing."
Social investors will find the book relatively
easy to digest. Her writing style makes for interesting reading, even when she covers dry subjects
such as research and Securities and Exchange Commission laws. The chapters are liberally peppered
with boxes containing examples, side notes, statistics and even stock picks. These boxes provide
useful breaks for the reader and help to lighten the book's overall tone.
But the most
striking characteristic of the book is how Domini hammers home the point that our shrinking world
needs to integrate personal and ethical concerns into the investment process. From the first page
to the last paragraph, she passionately argues with relevant examples how individual social
investors can effect change.
Domini writes "There are two basic reasons for integrating
social or ethical criteria into the investment decision-making process: the desire to align
investments with values and the desire to play a role in creating positive social change." She
goes on to explain how the reader can achieve this by detailing the three powerful tools of
enlightened social investors: investment screens, holding direct dialogue with company management
as a shareholder, and supporting community development financial institutions.
For each
of the three tools, Domini not only explains how and why to use them, but in some cases also
provides essential resources such as names, website addresses and contact information. Many social
investors will find these resources to be particularly useful, as the contact information will
enable inspired ideas to be acted on immediately.
A global perspective is important for
any book on social investing, and Domini's book does not fail here. While the focus is clearly on
the U.S., anecdotes and examples from other countries can be found throughout, and even one whole
chapter is devoted to global finance.
Domini goes on to stress the positive impacts of
applying social investing principles using the three tools detailed in earlier chapters. For
example, she writes the following about shareholder dialogue with company management: "It is only
prudent for the owners of a company to support requests for greater disclosure…Reducing risk
is one of the primary ways investors enhance return." She makes it clear that social investing
helps ensure, not deter, above-average financial returns.
In ending the book, Domini
reiterates that investors can make money while making a difference. "At the individual level," she
writes, "each person must see that his or her investment decisions can make a difference, thereby
tipping the scales of society to incorporate justice and environmental sustainability into our most
powerful civic structures, whether public or private."
Readers will be hard put to deny
the impassioned assertions like these that the author makes in her new publication. Of the
readership that has never given much thought before to social investing, Ms. Domini is likely to
win some converts. And as she said repeatedly in her book, those converts will make a difference.
www.domini.com
©
SRI World Group, Inc. All Rights Reserved.
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