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Socially Responsible Investing is a new trend that makes investment decisions accountable for their future impact.

If you have an interest in saving the planet, you’ll be pleased to know that you can use Socially Responsible Investing (SRI) to invest your monies in socially responsible corporations and industries.

Socially responsible investing is a reminder that how you manage and invest your dollars is not only important to you and your family, it can also have an impact on the environment and even society.

Skip to the Pros of Socially Responsible Investing infographic

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The Definition of Socially Responsible Investing

Investing your money in an ethical, socially conscious way means that you’re placing it in investment vehicles that not only earn you money but also do something positive for others.

Ethical or socially responsible investing usually involves placing your dollars with companies that use environmentally friendly practices, employ diversity when hiring, and manufacture products that are healthy or “good” for consumers. Investing in products or goods that are sustainable would also fall into this category of investing.

SRI or ERG what is the difference

ESG is all about environmental, social issues, and governance. ESG considers potential risks and opportunities beyond a corporation making easy money. Yet, ESG strategies still wish for a financial reputation.

Environmental: Energy usage, the potential for pollution, waste production, the impact on climate, natural preservation, and protection of animals

Social: Child labor regulation, health and safety of workers, human rights, community acceptance, the treatment of workers and consumers of products produced.

Governance: the type of management and board overseeing production, any potential for corruption, how much executives get compensated in regards to workers, and disclosure of potential issues impacting people

Socially responsible investing goes beyond ESG by eradicating or being attentive to investments using strict ethical strategies. The religious, moral, and political all have a place in the world of SRI. No longer is it just business, now businesses are held accountable by moral standards. When you pick companies to invest in using SRI guidelines, you may decide on exchange traded funds (ETF) that aren’t involved with the production of drugs that are addictive. You may also avoid companies involved with firearms all together. This is with or without regard to the potential financial benefits. Keep in mind that if your moral code is broken what is the point of supporting the corporation.

How is it Possible to Invest Only in SRIs?

This question is tricky because many companies are not socially conscious. This is important to keep in mind when you invest in mutual funds. Often it can be difficult to determine if all the companies represented in the mutual fund fall into the SRI category.

The best way to invest consciously is to do some homework online to ensure the companies or mutual funds you wish to invest in engage in ethical practices before consulting with stockbrokers and financial planners.

Also, through a process called, “screening,” investors and financiers evaluate companies based on how they perform socially and ethically using specific criteria to measure those elements. Corporations that receive less than satisfactory social responsibility performance scores may not gain investment dollars from ethical investors.

If you want to invest in a sustainable manner but don’t have the time or skills, there are mutual funds and ETFs available that will do it for you. By investing into one of these Funds/ETFs, you will get greater peace-of mind knowing your money is going towards something good rather than just to any company fueled by greed.

Here are some examples of ESG funds

iShares ESG MSCI EAFE ETF (ESGD)

Thornburg Better World International Fund (TBWIX)

Natixis Sustainable Future 2030 Fund (NSFFX)

iShares Global Clean Energy ETF (ticker: ICLN)

Where and How to Find SRI Companies/Investments

Recently, several socially responsible mutual funds have become available. Major investment companies such as Calvert and Van Eck Global offer socially responsible investments to their customers.

Some investment companies totally focus on offering environmentally friendly/SRI investment products. In addition, various websites specialize in getting the word out about SRIs. Social Funds website is one such example.

There is also a website that has a collaborative, online directory of ethical companies.

Factors to Bear in Mind When Considering Investments in SRIs

Your personal values.

Keep in mind your personal values about sustainability, human rights, employee treatment, and societal good as you make decisions about your investments. Carefully review company brochures, statements, and annual reports to get a feel for their investment environment before investing your dollars.

Possibilities for growth.

Remember that your main reason to invest is to make your money multiply. Even though your values steer you toward SRIs, ensure that you are making the best investment possible for your money.

Higher fees.

Because it costs more to perform tasks ethically and responsibly, don’t be surprised if you pay higher fees to invest in SRI companies and mutual funds.

There is much to know about making socially responsible investments. When you’re about to make any investment, do your homework, consider your personal values, think about the possibilities for growth, and determine your investment costs. With this strategy, your investments work both for your family and the good of the world we live in.

Is socially responsible investing effective

We all know that investing can be difficult. It’s not just about making money, it has to feel right too! But what constitutes “socially responsible” investments? The answer may depend on who you ask and how they look at things–but there are some clear guidelines for determining whether or not an industry should enter one’s portfolio in general terms.

Do nuclear energy plants cause more harm than good; could new technologies like solar power replace fossil fuels as we currently use them today. etc. You be the judge.

Check out our infographic for a quick rundown on the Pros of Socially Responsible Investing:

The Pros of Socially Responsible Investing infographic.

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