Do you know what Socially Responsible Investing is?
Socially responsible investors encourage corporate practices that promote environmental stewardship, consumer protection, human rights, and diversity. Some avoid businesses involved in alcohol, tobacco, gambling, pornography, weapons, contraception/abortifacients/abortion, fossil fuel production, and/or the military. The areas of concern recognized by the SRI industry are sometimes summarized as ESG issues: environment, social justice, and corporate governance.
“Socially responsible investing” is one of several related concepts and approaches that influence and, in some cases govern, how asset managers invest portfolios. The term “socially responsible investing” sometimes narrowly refers to practices that seek to avoid harm by screening companies included in an investment portfolio. However, the term is also used more broadly to include more proactive practices such as impact investing, shareholder advocacy and community investing. According to investor Amy Domini, shareholder advocacy and community investing are pillars of socially responsible investing, while doing only negative screening is inadequate.
Many advisors are focusing on socially responsible investing because their clients want it. The belief is that you can adding value via diversification. These types of funds are better than they used to be. Early funds were more focused, but in the past 5-10 years, there are more fund options in this space, including fixed income options.
If this is important to you, might want to check it out.
- Published: May 26, 2015