Socially responsible investors can pursue a couple of avenues to invest in metals and mining. The first method is to research companies that profess and exhibit environmentally, ethically and culturally responsible business practices. There are also mutual funds that only hold securities of companies considered socially responsible. Current shareholders of metals and mining companies can engage in shareholder advocacy campaigns to promote socially responsible ideas. Investors can also purchase government bonds from responsible governments involved in mining projects.

Researching Socially Responsible Metals and Mining Firms and Funds

There is no standard, official metric of social responsibility. There are so many different interpretations of a socially responsible firm that many parameters are unique to the individual investor. That said, there are a few aspects of the metals and mining sector to take into consideration. Many metals, particularly precious metals such as gold and palladium, are extremely rare. Mines may be concentrated in only a handful of countries. South Africa probably has the most well-known reserves of precious metals. Socially responsible investors should investigate the business practices of firms and governments that mine in underdeveloped countries. Socially responsible firms respect domestic cultures and populations.

Mining is also an environmentally disrupting process. Companies can face serious environmental and regulatory challenges that include cyanide usage, pollution, treatment of labor and noise ordinances. Organizations and political movements such as the Initiative for Responsible Mining Alliance, or IRMA, and the United Nations Global Compact have been established to help promote social goals. Investors can begin by looking for firms or mutual funds committed to such initiatives.

Some investors prefer to use a strategy known as the SRI, or Socially Responsible Investing, Screening approach. The SRI Screening can involve one of three filters: the Negative screen, Positive screen and Restricted screen. Negative screening involves eliminating companies for certain practices, such as wages below a certain threshold. A Positive filter might indicate companies that have proven their social responsibility in some way or received a specific certification.

Many fund managers have adopted a Restrictive screen. Restrictive screens typically allow a small percentage of company assets to be involved in undesirable activities. This is a more moderate approach than many would like, but it is far more inclusive for those looking to build effective risk-reward tradeoffs.

Don't Forget About Risks and Returns

Socially responsible investors still need to recognize economic reality. Profitable firms grow and unprofitable firms go out of business. Investors stand to lose or gain based on the business acumen, and not the political philosophies, of their corporate choices. Fortunately, many economically responsible mining practices are also socially beneficial. Companies that build better relations with their communities have less chances of facing lawsuits, protests and mine closures. Additionally, companies are increasingly aware of the benefits of positive press in the investing sphere. This strengthens the relationship between doing the "right thing" and the bottom line.

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