Social Conscious Investing is of interest to many people, but is a complicated and there are many perspectives to consider. This post was initiated by a thought provoking comment from yesterday’s post, Does Investing in Stock or Mutual Funds Matter?

I grant that an individual purchase of a company’s stock is not going to change the profits, losses, debt or amount of cash on hand for that company. But this is not the direct intention of Socially Conscious Investors or any investors for that matter. SCI is a means to put dollars behind companies that are doing the “right thing.” Those dollars are going to investment companies, not to the companies in which the S.C. Investor is purchasing stock. The value of the stock in a company is affected in part by the demand of investors.

Companies that roll out a sustainable business plan are looking out for their bottom line. Socially conscious investors care about the company’s bottom line and the business plan also. I believe that companies that see that sustainable business practices help their bottom line will increase their efforts to expand those types of practices. An increase in these business practices creates expanded demand for the socially conscious investments.

Managers that watch their net worth increase based on the increase in their company’s stock value will stand behind pro-social and pro-environmental business decisions. If their socially conscious plans meet with financial failure, then they will abandon that path. SCI principles are going to prosper or decline based on these business decisions. These investment principles will be affected by how a company reacts to its stock value. I believe that the four tenets supporting that a company cares about its stock price are sound.

In the end, this is not about partial ownership of a company through stocks, mutual funds or ETFs for socially conscious investors. S.C. Investors want to be able to have their “voice” heard. They are given the possibility for a stronger voice when they buy into SCI mutual funds. S.C. Investors are given a voice when they describe their investing principles to other people. S.C. Investors provide themselves a solid inner voice by acting on their principles. The strengths mention here are factors outside of how a stock affects the immediate bottom line of a company.

The question of whether S.C. Investors should put their collective voice behind companies that continue unsustainable business practices in order to get them to change is an interesting contrarian argument. I will ruminate on that and try to develop a response to that idea in the future.