Whether investors are concerned with the environment, the community, the workplace, or a host of other issues affecting the quality of the world we live in, SAI offers the opportunity to invest with one's values. Even though SAI is growing in popularity, it has opponents, who say it cannot also provide competitive returns. A key argument is that the social screening process leads to lower returns by limiting the investment universe and reducing opportunities for portfolio diversification. On the other hand, proponents of social investment argue that over the long term, investments identified as socially responsible may be among the most profitable. The theory is that companies with good employee relations will generally have lower turnover and higher productivity, that corporate investment in environmental initiatives can pay off in reduced resource costs and fewer legal liabilities, and that companies promoting equal opportunity can better access a diverse talent pool and multicultural markets.
Social investors are concerned about a wide range of issues.
This can be reflected in a portfolio designed to avoid problematic areas of investment and support those areas actively promoting social and environmental well-being. Studies strongly suggest that investors do not have to sacrifice profit for principles. Since the Index's inception close to nine years ago, its performance has surprised many skeptics, generating returns close to or above those of the Standard and Poor 500, an index generally accepted as a performance benchmark for the U.S. equity market. Robert G. Fernandez is vice president and financial consultant with Salomon Smith Barney in Austin, Texas. Copyright 2001 by Hispanic Magazine.