Socially Responsible Investing

 

SRI, or Socially Responsible Investing is an investment strategy that seeks to consider both the financial return and the social good for change the investment will support. Socially Responsible Investing has been around for a long time, but it began gaining momentum in the 1960s with the civil rights and anti-war movements. As another example, SRI played a role in South Africa starting in the 1960s, when it was used in the struggle to end apartheid, which did finally happen in 1994. In this case, the emphasis was on divesting from companies doing business with the apartheid government, which is one strategy for socially responsible investing. Of course, it also includes investing in companies that are helping reach particular environmental or social goals.

Socially responsible investing is an overarching term for these practices, which have been growing in popularity in recent years. It is being used as a guiding principle for some pension funds, mutual funds, ETFs, divestment strategies (or negative investing), or positive investing and impact investing. SRI is related to a more common term used today, ESG investing, or the use of environmental, social and governance screens when making investments. The bottom line is that socially responsible investing involves using assets to support companies in line with an investor’s values, or to avoid companies blatantly in contrast to those values, or both.