There's at least one silver lining to the BP oil spill: those obnoxiously self-righteous "socially responsible" investment funds have taken a hit due to their heavy exposure to BP shares. Apparently, BP was a "green" company only in the sense that their marketing said they were: Oops: "Socially Responsible" Funds Hold Big Stakes In BP The oil that spewed into the Gulf of Mexico has stained some "socially responsible" mutual funds.
These portfolios aim to invest based on environmental, human rights, corporate governance and other criteria. Yet a number of major socially responsible funds and indexes included BP PLC on April 20, when the spill turned the energy giant into a pariah among environmentalist-types.
The BP case shows just how different socially responsible portfolios can be. While BP had clear safety issues that alienated some of these funds even before the Gulf spill, others favored the company because of its stance on climate change and alternative energy.
The upshot on socially responsible investing: "Investors need to do more legwork than they might have originally thought when choosing an SRI fund," says Kathryn Young, mutual fund analyst at investment-research firm Morningstar Inc.
You see, kids, that's what happens when you invest based on a corporation's TV commercials rather than reality. Just because a company declares that it is "Beyond Petroleum" and fills its commercials with hip looking twentysomethings* pontificating about the future of energy ("Cars could run on hay. We need to look at all of our options!"), doesn't mean the company has stopped exploring/drilling/selling (hissss) oil. I mean, look around you. Do you see any billion dollar muti-nationals making profits off wind farms and solar panels? No, and it's not for a lack of trying - or a lack of government subsidy. Wishing won't make it so, but it will make your $$ float away on a draft of hot air.
You want to invest in a socially responsible way? Then make your investments so that they can be put to their most efficient and profitable use today, not in your fantasy future. That'll benefit society a lot more than grand talk about wind farms and ethanol.
*none of whom give any appearance of having taken a college-level science class.
