Socially Responsible Investing – SRI

With the current media attention being paid towards areas such as climate change, plastic pollution, air pollution and numerous examples of social degradation, a growing number of investors are turning their attention towards investing in areas that aim to tackle such issues. Sustainable, responsible and impact investing (SRI) is an investment discipline that considers environmental, social and corporate governance (ESG) criteria to facilitate the growth of long-term competitive financial returns and positive environmental and social impacts. In the United States alone, sustainable investing now represents one in four dollars of the $46.6 trillion in U.S. assets under management.

 

There are a number of motivations for sustainable, responsible and impact investing. From personal values and goals, institutional missions, corporate PR images, and the demands of clients, constituents or plan participants – the demand for sustainable and ethical investment avenues is ever increasing. While sustainable investors aim for strong financial performance, but also believe that these investments should be used to contribute to advancements in social, environmental and governance practices. They may actively seek out investments such as community development loan funds or clean tech portfolios that are likely to provide important societal or environmental benefits. Some investors embrace SRI strategies to manage risk and fulfill fiduciary duties; they review ESG criteria to assess the quality of management and the likely resilience of their portfolio companies in dealing with future challenges. Some are seeking financial out performance over the long term; a growing body of academic research shows a strong link between ESG and financial performance.

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