Socially Responsible Investing (SRI)

Socially Responsible Investing (SRI) involves investing in companies that promote ethical and socially conscious themes including environmental sustainability, social justice, and corporate ethics, in addition to fighting against gender and sexual discrimination.

Frequently Asked Questions
  • Why is socially responsible investing (SRI) important?

    While investing is an excellent way to build wealth over time, it can be difficult to reconcile a desire to make money with potentially supporting companies that have a negative impact on the environment and our society. Socially responsible investing (SRI) is a solution to this dilemma, as it gives people the opportunity to make more ethical investment decisions. It is also a somewhat subjective concept, as how an investor practices SRI will reflect their personal values and morals.

  • What are the differences between SRI and ESG?

    Socially responsible investing (SRI) is the practice of actively avoiding investments that conflict with an investor’s ethical beliefs. Environmental, social, and governance (ESG) refers to a set of criteria used to analyze the sustainability of a company’s behaviors and policies. Investors that practice SRI can use ESG as a tool to screen investments that conflict with their values.

  • What are the differences between SRI and CSR?

    Socially responsible investing (SRI) is a type of investing that excludes companies failing to behave in a socially responsible manner. Corporate social responsibility (CSR) is a model that businesses can follow to ensure they are operating in a socially responsible manner. By utilizing SRI, investors can incentivize companies to follow the CSR model.

  • Does socially responsible investing hurt investment returns?

    Several studies have found that returns aren’t negatively impacted when investors invest in companies that align with their values. This has also proven to be the case if they exclude popular businesses with poor ESG practices. In 2021, the Morgan Stanley Institute for Sustainable Investing found companies that focused on ESG factors weathered the economic volatility of COVID-19 better than their non-ESG counterparts.

Key Terms

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  1. The Forum for Sustainable Investing. "Financial Performance With Sustainable Investing." https://www.ussif.org/performance