The Basics of Socially Responsible Investing

Socially responsible investing, or SRI for short, is a financial strategy that invests in securities aligned with an investor’s personal values and priorities. It has become an increasingly popular way to accumulate wealth while simultaneously contributing to causes and issues close to your heart.

This strategy avoids companies that produce or sell addictive substances (like alcohol, gambling and tobacco) in favor of seeking out those engaged in social justice, environmental sustainability and alternative energy/clean technology initiatives. It can be implemented through mutual funds, exchange-traded funds or individual stocks.

What is SRI?

SRI (Socially Responsible Investing) is an investment approach that places social values and moral considerations above financial returns. This could be beneficial for investors who are passionate about a particular cause or issue.

SRI invests in companies that prioritize environmental sustainability, alternative energy sources and clean technology. Their strategies also emphasize corporate accountability and fair corporate governance practices.

SRI has seen tremendous growth over the years, yet it can still be challenging to determine which companies provide truly beneficial SRI options.

However, there are various resources to help you identify which SRI investments are worthwhile. These include third-party ESG ratings and companies’ ESG reports.

What are the benefits of SRI?

Socially responsible investing (SRI) involves applying your own values and ethics to your investments. It may involve avoiding certain companies or industries that don’t align with your beliefs, or selecting those which you feel make positive contributions to society.

SRI, also referred to as impact investing, sustainable investing or ESG investing, can be confusingly mislabeled due to their different meanings to different people.

Investing in Sustainable Resource Utilization (SRI) can make a tremendous difference for those who struggle to meet their basic needs and lack other sources of income. Farmers who use SRI management use 70-90% fewer seeds than farmers using conventional techniques, saving them money and cutting labor costs while increasing yields so there’s more food for families to eat.

How do I start investing in SRI?

Depending on your investment objectives, there are various ways to invest in socially responsible investing (SRI). You can do this through mutual funds, exchange-traded funds (ETFs), or individual stocks.

SRI, or value-based investing, is an approach to financial management that seeks to align your financial returns with personal values. It allows you to allocate your money where it can make the greatest impact.

Different forms of SRI investments exist, such as impact investing and ESG investing. Generally speaking, those who focus on SRI or ESG tend to see a better return from their investments than those who don’t.

SRI can be an excellent way to diversify your portfolio and avoid investing too heavily in one company. To achieve the maximum benefit from SRI, spread out your investments across multiple stocks, mutual funds and ETFs.

How do I choose SRI investments?

Socially Responsible Investing (SRI) is the practice of investing in companies that make a positive impact on society. It takes into account environmental, social and corporate governance criteria to create long-term competitive returns while simultaneously creating beneficial social effects.

Not all investments are alike, however. Some are more ethical and environmentally friendly than others.

SRI investors may choose to exclude certain investments from their portfolios, such as tobacco or gambling companies. Or they might include investments that align with their personal values and ethics.

Before making an investment decision, it is essential to do your due diligence. You can accomplish this by conducting your own research or hiring a financial advisor who can guide you in selecting investments with social responsibility in mind.

You can find SRI mutual funds, ETFs and managed accounts that allow you to build a comprehensive portfolio of SRI investments. These investment options are convenient and affordable, typically aligning with your desired SRI strategy such as low carbon production, good governance practices, gender diversity or global issues.