Socially responsible investment, or SRI, is a strategy that considers not only the financial returns from an investment but also its impact on environmental, ethical or social change. Identifying which ventures to put their hard-earned money into can be difficult for potential investors.
Socially responsible investing (SRI) is an investing strategy that aims to generate both social change and financial returns for an investor. Socially responsible investments can include companies making a positive sustainable or social impact, such as a solar energy company, and exclude those making a negative impact.
Socially responsible investing provides a mechanism for investors to align personal values with investment objectives. Environmental, social, and governance (ESG) factors can be a key way to assess the sustainability and social impact of an investment in a company or business.
The most rewarding feeling when you take an SRI strategy is when the companies you invest in begin to make a profit and reward you financially. Not only does it show that you're aligned with the values of the companies you've invested in, but it also shows they're profitably doing good.
According to a report issued by the investment bank Morgan Stanley, titled Sustainable Reality: Understanding the Performance of Sustainable Investment Strategies, investing in socially responsible companies is more profitable than investing in traditional companies.
The Responsible Returns online tool is an initiative of the Responsible Investment Association Australasia, to help consumers find, compare and choose responsible and ethical superannuation, banking and investment products that best match their interests.
Socially responsible investing ramped up in the 1960s, when Vietnam War protestors demanded that university endowment funds no longer invest in defense contractors.
We have highlighted our selected top ethical investment fund picks that are worth considering:
Generally, these seven areas are the focus of socially responsible investors:
ESG factors can help investors avoid companies that may be more likely to suffer from one or more of these risks. For example, the agribusiness giant Monsanto received poor ESG ratings in past years due to numerous unsustainable environmental practices.
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Mitigate Risk
Working for the community, such as volunteering, giving blood donations, and working at a food bank or animal shelter. Supporting issues that affect society, such as advocating political or social issues that can help others—for example, advocating for child labor laws, purchasing fair trade products, recycling.
Many socially responsible funds have achieved good results. According to the Responsible Investment Benchmark Report 2018 Australia, core responsible investment Australian share funds outperformed the average large cap Australian share funds over three, five and ten-year time horizons.
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