What is Socially Conscious or Socially Responsible Investing?

Socially Responsible Investing (SRI), also known as sustainable, socially conscious, “green” or ethical investing, is an investment strategy that often uses positive or negative screening to decided whether to include or exclude investments from a portfolio.  The strategy considers both financial return and social/environmental good to bring about a positive change. Investors no longer need to sacrifice financial returns to create social good.

To measure the sustainability and the ethical impact of an investment,  three main factors are often considered: environment, social justice, and corporate governance, or referred as ESG.

 

Why should we care about Socially Responsible Investing or Do Good Investing?

Socially responsible investors encourage corporate practices that promote environmental stewardship, consumer protection, human rights, and diversity. Some avoid businesses involved  in alcohol, tobacco, fast food, gambling, pornography, weapons or fossil fuel production. By exerting our collective investment power or our power as consumers, we can bring about positive changes to the environment and to our local communities– achieving social benefits desired along with the financial rewards.

 

ESG engagement can create value for both shareholders and companies. Please see a report commissioned by the Principles for Responsible Investment (PRI.org) here.