Socially Responsible Investing: Common Criticisms & Concerns

Socially responsible investments have a number of benefits for investors. As with any type of investment, there are also people that do not like these types of investments. Here are a few of the criticisms of socially responsible investments.

1. Lack of Performance

The object of the game in investing is to make money. When it comes to this type of investment, some people are choosing to invest in a company simply because they are socially responsible. They are putting too much weight into the fact that they are socially responsible and they are ignoring lack of performance.

2. Excessive Risk

Another problem with many of these investments is that you have to take on excessive amounts of risk in order to put money into them. Many of these companies are relatively new and they do not have a very substantial track record. Many of the companies are also in very volatile industries such as alternative energy. If the company that you invest in happens to come across an amazing technology, you will win big. If they don't, you are going to lose your money.

3. Lack of Qualifying

It can be difficult to determine which companies are socially responsible and which ones are not. If you invest in a socially responsible fund, it can be hard to keep track of the individual efforts of each company that you put money into.