What is Socially Responsible Investing?
Socially Responsible Investing (SRI) is an investment strategy that seeks to generate financial returns while also considering the social, environmental, and ethical impact of investments. It allows investors to align their portfolios with their personal values and beliefs.
Key Principles of SRI
- Ethical Screening: Investors commonly utilize positive and negative screens to select or exclude companies based on specific criteria, such as environmental practices, labor relations, and corporate governance.
- Sustainability Focus: SRI often emphasizes investments in sustainable and eco-friendly companies, promoting practices that protect the planet and serve social good.
- Community Impact: Investors may choose to support industries or sectors that contribute positively to their communities, such as renewable energy or affordable housing.
Benefits of Socially Responsible Investing
Investing with a social conscience can enhance portfolio diversification, reduce risk by avoiding troubled industries, and provide a sense of fulfillment that comes from knowing investments support ethical practices. Research suggests that socially responsible funds often perform comparably to traditional funds, challenging the notion that ethical investing sacrifices returns.
Conclusion
As more investors prioritize sustainability and social impact, socially responsible investing gains traction. By choosing investments that reflect their values, investors can make a positive difference while pursuing their financial goals.