Socially Responsible Investing – An Ethical Approach to Investment
Whether you are a new or seasoned investor, you are likely to find more opportunities to grow your wealth and make an impact on the lives of people and our planet. That is possible with Socially Responsible Investing (SRI), which means that you will be investing in organisations that promote socially conscious and ethical themes, like gender equality, environmental sustainability, and animal welfare. Also known as ‘sustainable investing’, it is the investment strategy that aims to consider both social and environmental good along with financial returns, with the goal to have a positive impact on social change.
Social responsibility is more important than ever, as more companies and individuals are becoming aware of their impact on social issues. You can do your part as an investor with socially responsible investing. As a socially responsible investor, you can encourage corporate practices that are in line with your own values, which can be anything from human rights to environmental stewardship, gender or racial diversity, and human rights. You could even invest in the modern food industry, which is focused on finding environmental-friendly meat alternatives and plant-based foods.
To get started with socially responsible investing, you must look into ESG principles and apply them in your approach. ESG stands for environmental, social, and governance, and it is a widely recognised way to measure a company’s sustainability from ethical perspectives. Apart from determining the level of sustainability, the ESG principle could also help you understand its role on the long-term performance of the company. This way, you can be confident in a future-proof investment.
Socially responsible investing does not mean that you will get lower financial returns. There is growing evidence that it can be profitable. A study conducted in Harvard found that companies doing well on sustainability issues relevant to their industries can outperform companies that rated poorly. Morningstar, an investment research company, supported that when they said that companies embracing low-carbon technology have a better chance at being future-proof, and that companies providing fair treatment on their employees enjoy consistent cash flow.