Hamilton What Is Socially Responsible Investing?
Socially Responsible Investing (SRI) is how investors can "bet their conscience" with the expectation that a company that is doing "the right thing" will, in the long run, do financially better than companies involved in unhealthy and bad-for-the-planet activities. This approach to investing encompasses an estimated $3 trillion out of $25 trillion in the U.S. investment marketplace (pre-Crash of 2008).
Socially responsible investors include individuals, corporations and institutions. These include, universities, hospitals, foundations, insurance companies, public and private pension funds, nonprofit organizations, and religious institutions who must invest large endowments of investment pools for specific long-term objectives.
SRI investors encourage public companies to improve their environmental & social practices, and improve their governance issues. This approach is also called responsible investing, ethical investing, sustainable investing, or green investing.
As a result of its investing strategies, SRI also works to enhance the bottom lines of the companies in question and, in so doing, delivers more long-term wealth to shareholders. In addition, SRI investors seek to build wealth in underserved communities worldwide. With SRI, investors can put their money to work to build a more sustainable world while earning competitive returns both today and over time.
How You Can Get Involved?
Individuals can begin a responsible investment program by:
- Diverting investments away from institutions or businesses that pollute, cause harm to the environment, conduct business in/with oppressive regimes, use unfair labour practices, produce nuclear weapons or nuclear power, or employ any other practices damaging to the quality of life.
- Invest in companies whose products, services and practices contribute to a more socially just and sustainable society. Invest money in community banks, micro-lending institutions (for the developing world), loan funds and similar financial vehicles.
- Make a small investment in a company in order to influence the direction of business. Use shareholder activism (proxy votes and Annual General Meeting attendance) to make a positive change to business practices.
- Invest in community investing institutions such as community development banks, credit unions, or loan funds. You can find FDIC options and your dollars will help provide access to capital and basic financial services to low-income communities.
Screening StrategiesScreening, can include both positive and negative screens to evaluate investment portfolios or mutual funds based on social, environmental and good corporate governance criteria.
Positive screening look Screening may involve including strong corporate social responsibility (CSR) performers, including factors like good employer-employee relations, strong environmental practices, products that are safe and useful, and operations that respect human rights around the world.
Conversely, Negative screening is when social investors avoid investing in companies whose products and business practices are harmful to individuals, communities, or the environment. It is a common mistake to assume that SRI "screening" is simply exclusionary, or only involves negative screens.
Funds and investments are screened or rated for their involvement in (such as no investment, positive investment, restricted investment, no screening) each of these categories. The first few are considered negative factors, while the last few are either positive or negative, depending on corporate practices.
Negative Screening Criteria
Postive Screening Criteria
Learn More... How many SRI mutual funds are there?
As of 2007, there were 260 socially screened mutual fund products in the US, with assets of over $200 billion. Back in 1995, there were just 55 SRI funds with $12 billion in assets including domestic and international investments, hedge funds and ETFs (exchange traded funds). See Find socially responsible mutual funds in our Mutual Fund Performance Charts >