Socially Responsible Investing Isn't Just for Hippies
Casey is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Most of us enjoy the warm, fuzzy feelings associated with all around good-doing, which is why we occasionally donate to charity or buy green products. However, when it comes to making money rather than spending it, there's often less room for ethical consideration.
So what is a socially-conscious investor to do? The prevailing concern is that socially responsible investments (SRIs)--especially individual stocks--don't perform as well as their morally-questionable counterparts. After all, limiting your stock selections to such a small subset means you're also limiting your potential to earn competitive returns.
But you should know that SRIs aren't just for granola-crunching, tree-hugging investors, and don't require you to sacrifice performance in the name of the greater good. In fact, many of the most recognizable and widely held stocks are categorized as socially responsible investments.
The following are 5 very well known companies that have been recognized as socially responsible and have a CAPS rating of "appealing" or higher:
Apple (NASDAQ: AAPL)
CAPS Rating: 3 Stars
Social Responsibility: According to the latest Apple Supplier Responsibility progress report, Apple requires that their suppliers "provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes wherever Apple products are made."
Additionally, AAPL is a top holding among several SR index funds, including the Calvert Social Index Fund (CSXAX).
Kraft Foods (NASDAQ: KRFT)
CAPS Rating: 4 Stars
Social Responsibility: Kraft Foods has repeatedly been included in the Dow Jones Sustainability Index, which tracks the financial performance of leading sustainability-driven companies across the globe.
Kraft Foods CEO Irene B. Rosenfeld stated in the company's 2010 report, "As a global food company, we can help raise people up--out of hunger, out of poverty, toward healthier lifestyles--through what we make and how we make it. Millions of times a day … in ways big and small … quite literally around the world, we’re doing just that."
Google (NASDAQ: GOOG)
CAPS Rating: 4 Stars
Social Responsibility: Google is a behemoth company, maybe the only one whose name has also become a verb, yet they use their global dominance for good in a number of ways. Most notably, Google is a leader in philanthropic endeavors with programs such as Google Grants, and the company recently scored the #2 spot on the 2011 Corporate Social Responsibility Index (CSRI) Top 50.
International Business Machines (NYSE: IBM)
CAPS Rating: 4 Stars
Social Responsibility: IBM has recognized that as a leader in technology, it has as an opportunity to provide solutions to today's most pressing societal needs, including in the areas of the environment, education and health. What's more remarkable, however, is that IBM considers it an obligation, not a choice, to make strides in corporate social responsibility.
IBM boasts many accolades for social responsibility, including a #1 ranking on Newsweek's "Green Ranking" and #4 on Barron’s World’s Most Respected Companies list.
Johnson & Johnson (NYSE: JNJ)
CAPS Rating: 5 Stars
Social Responsibility: Johnson & Johnson focuses on creating community-based programs with the goal of improving health and well-being. The company and its community partners work to improve medical care and prevent disease around the world.
Perhaps that's why this company also has one of the best reputations in the world. In 2010, they ranked #4 on CNN Money's list of the "World's Most Admired Companies" (Apple and Google took the #1 and #2 spots, respectively).
Social responsibility doesn't have to be synonymous with mediocrity when it comes to investing. Whether social issues are close to your heart or you're a huge fan of handguns and cigarettes, adding socially responsible investments to your portfolio is a smart move.
Motley Fool newsletter services recommend Apple and Google. The Motley Fool owns shares of Apple, Google, International Business Machines and Johnson & Johnson. CaseyBond has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
