Socially responsible investment


In the business world, ‘investment’ has two separate but related meanings. For many producers, ‘investment’ means spending money in ways that add to the capital stock of the business, e.g. by extending factory buildings or office buildings, or modernising machinery. Businesses finance this investment either out of profits, through borrowing or by attracting funds through a share issue. Financial assets Investment can also mean ‘purchasing financial assets in the form of stocks, bonds and shares’. These financial assets yield interest payments (in the case of loan certificates) and dividends (in the case of share certificates). Shareholding also gives an opportunity to enjoy capital gain (or to suffer capital loss). Investment companies buy a portfolio of financial assets on behalf of their clients, who will include individuals seeking to protect their savings as well as large firms looking for a safe, profitable place to deposit, for example, their pension fund receipts.  Investment companies have to be good at identifying and buying financial assets that will yield a good return and at avoiding or discarding investments that look likely to yield a poor return.  Millions of people depend either directly or indirectly on the skill with which investment companies build up and manage...

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