This term can also be referred to as social investment, ethical investment, responsible investment or sustainable investment. SRI investing refers to an investment strategy which considers both financial return and wider positive social and environmental impacts. Socially responsible investments can be made directly into individual companies or via socially conscious mutual funds or exchange-traded-funds (ETF).
Socially responsible investors promote corporate practices that are backed by positive environmental stewardship, consumer protection, human rights and racial/gender diversity. Often socially responsible investing is defined as an investment discipline which incorporates environmental, social and governance (ESG) criteria in order to generate long-term financial return and positive societal impact.
Socially responsible investment can follow a wide variety of investment strategies. SRI is a rapidly growing market around the world. The strategies include:
The incorporation of environmental, social and governance (“ESG”) criteria into the fundamental investment analysis.
The exclusion of specific securities from investment consideration based on social or environmental criteria. For example: The exclusion of tobacco or fossil fuels.
The act of removing specific stocks from a portfolio based upon ethical and non-financial objections to a specific business practice.
The act of making specific investments in activities and companies believed to have a positive social impact.
Providing capital to specific businesses that are aimed at providing positive social impact to stakeholders.