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.
Socially Responsible Investing (SRI)
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.Learn More: The Value in Socially Responsible Investing
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.Learn More: How ESG, SRI, and Impact Funds Differ?
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.Learn More: Corporate Social Responsibility: Top Trends
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.Learn More: A History of Impact Investing
Environmental, Social, and Governance (ESG) Criteria
Environmental, social, and governance (ESG) criteria are a set of standards that can be utilized by investors to evaluate whether companies are behaving responsibly and enforcing policies that promote environment protections, ethical relationships, and accountable leadership. These criteria also help investors steer clear of companies that may face consequences for dangerous or unethical behavior.
UN Principles for Responsible Investment (PRI)
The UN Principles for Responsible Investment (PRI) is a United Nations-supported network of investors who work to identify, promote, and ensure the adoption of environmental and sustainability practices within financial institutions. Originally founded in 2006, the PRI works with over 200 financial institutions and has 7,000 corporate signatories across 135 countries.
Impact investing is an investing strategy designed to put money toward positive societal change while still generating returns. Socially responsible investing (SRI) and environmental, social, and governance (ESG) investing are two of the most well-known forms of impact investing.
The term “corporate accountability” is a measurement of how a publicly traded company has operated in areas outside of its financial performance, primarily regarding sustainability and social responsibility. Businesses often voluntarily publish corporate accountability reports for the benefit of both their shareholders and the general public.
Corporate Social Responsibility (CSR)
Corporate social responsibility (CSR) is a self-regulating business model that companies can use to ensure they are remaining socially accountable to themselves, shareholders, and the public when conducting business. CSR has the benefit of both improving society and the environment as well as bolstering a company’s public image.
Socially Responsible Investment (SRI)
A socially responsible investment (SRI) is a type of investment that is intended to align with the investor’s ethical principles. SRIs can take the form of purchasing shares of companies that support environmental sustainability or social justice as well as investments into a mutual fund or ETF that eschews any companies with ties to the production and/or sale of addictive substances.
A social audit is a formal, internal examination of a company's operations and policies in terms of how its business impacts society. These kinds of audits allow companies to analyze whether or not they are striking a balance between social responsibility and profitability.
Carbon trade refers to the buying and selling of government-authorized credits that permits an organization to emit a limited amount of carbon dioxide (as well as other kinds of greenhouse gas). The idea behind carbon trading is to motivate nations to reduce their carbon emissions so that they will have additional permits that they can then sell.
Explore Socially Responsible Investing
The Forum for Sustainable Investing. "Financial Performance With Sustainable Investing." https://www.ussif.org/performance