Any investment strategy where both social and environmental benefits and financial returns result in positive social change is known as socially responsible investing. Also known as sustainable investing, it encourages corporate practices believed to promote any known cause—such as animal welfare, environmental stewardship, human rights, gender or racial diversity, and consumer welfare. It may also involve avoiding businesses and organisations perceived to harm the environment and society, such as fossil fuel production, tobacco, alcohol, gambling, and meat products.
Socially responsible investing is among the several related approaches and concepts that govern or influence how an asset manager would invest portfolios. It considers the ESG criteria, which represents environmental, social, and corporate governance, so a socially responsible investor can make an informed decision on which funds or companies to invest in. This investing works like other investment styles, but with social responsibility and company ethics considered essential aspects. That said, it is not merely about growing your money by putting it into securities.
Social and political trends tend to influence socially responsible investing. In the past, sustainable investors were focused mainly on anti-war efforts, women’s rights, and civil rights. Today, the focus is primarily on sustainable solutions to modern challenges, such as ethical business practices, climate change, and animal welfare. You can also find investment companies focused on opportunities in the modern foods industry, in which environmentally friendly alternatives and plant-based nutrition sources are being considered to traditional meat production.
As you get started with socially responsible investing, you’ll find a wide array of good causes, funds, and organisations. Consider the level of risk you are willing to take, as well as your current investments and income, and don’t forget the personal meaning of the terms ‘socially responsible’, ‘impact’, and ‘sustainable’. That way, you can confidently evaluate organisations, funds, and investments beyond the financial gain. Likewise, you should measure their potential to make an impact on a specific movement or cause.
