Profit is only the beginning of the potential your investments can have for you and for the planet as a whole. You have the power to develop a more prosperous and sustainable world, including through your role in the financial system. By placing your capital in efforts that promote and maximize financial value as well as social and environmental value, you can make a positive difference in a number of social and environmental areas. In this article, we’ll discuss what socially responsible investments are, the pertinent details of SRI investors and SRI investments, and the positive impacts of socially responsible investing.
What are Socially Responsible Investments?
One of the biggest ways you can make a positive difference in the world is with socially responsible investing. Also known as social investments or socially conscious investments, socially responsible investments are investments deemed socially responsible because they focus a great deal of support specifically toward businesses that either support or directly participate in socially responsible behaviors. Socially responsible behaviors and business practices include efforts to improve communities, the environment, and the economy. Corporate social responsibility is a type of self-regulation reflecting a given business’s commitment and accountability to the well-being of society through various social and environmental efforts.
It’s also worth knowing that these businesses and individual investors need not choose between making a consistent profit by investing a portion of their funds in environmental and social efforts. One of the biggest myths surrounding socially responsible investments is that you can’t yield consistent returns compared to traditional investing efforts. Socially responsible investment efforts continue to grow in popularity and success. Corporate social responsibility efforts can include efforts toward charity work, environmental initiatives, volunteer projects, and ethical labor practices. A business might support the production and distribution of renewable energy sources or participate in these behaviors themselves for the benefit of the environment.
SRI Investors
Any individual party or company that invests its money in socially responsible, sustainable, or green investment efforts can essentially hold the title of SRI investor. SRI investors can come in a number of forms, as socially responsible investments and support both have a diverse range. You can support social and environmental efforts in a wide range of ways, with other efforts including social justice, gender and sexual discrimination, and corporate ethics. Socially responsible efforts can range from working to decrease or eliminate harmful social and environmental practices to actively working to increase and further promote beneficial social and environmental practices.
While socially responsible investing is a worthwhile cause to contribute to, it’s important to be careful and considerate of your various SRI investment efforts. As these efforts are still somewhat new and developing, some companies use the term to their advantage by claiming to be socially responsible while studies exhibit the true nature of their harmful practices. However, as these investment efforts are continuing to develop and grow in popularity and frequency, so too are efforts to protect and solidify the terminology and companies’ abilities to use it toward their products and profit. As these practices grow, we as a society can have renewed hope in the sustainability of our planet.
SRI Investments
When you’re looking to begin or increase your current socially responsible investments, you’ll want to decide what specific efforts you’d like to begin supporting, what type of support you want to have, and continue to monitor your support for profitability and existing levels of social responsibility. The two inherent goals of SRI investments are financial gain and social impact. You want to support socially and environmentally positive efforts without putting yourself in a detrimental financial position. Just because a given investment proclaims to be socially responsible doesn’t inherently mean it’s capable of providing a solid financial return. Inversely, the promise of a good financial return doesn’t necessarily mean the company is socially conscious.
As you begin to invest in socially responsible efforts and business practices, the risks and benefits are what make an investment advisor worthwhile. It can be difficult to determine where to direct your financial support, to figure out and monitor the true social responsibility of a company you’re considering supporting or currently supporting, and to yield the highest levels of financial success and ESG support. To build a socially responsible portfolio, you’ll want to decide on your level of support from a financial investor, and open an investing account if you’re new to the world of investing. You’ll also want to outline what’s important to you personally, what you’re looking for in an ESG or SRI investment, and research potential investments with care.
The Positive Impacts
There are endless positive impacts to socially responsible investing. Your investment dollars can make a real, measurable difference on behalf of people and the planet. As climate change continues to grow as an urgent issue each year, more consumers consider ways their financial power can influence large corporations to take greener steps. This can include reducing their carbon footprint or offering greater transparency about manufacturing processes. With your investment dollars, you can positively impact the environment, providing for greater sustainability through renewable energy resources and withholding support from practices that contribute to pollution and deforestation. This enables the planet to endure and thrive.
With regard to social impacts, your SRI investment dollars can positively influence greater levels of diversity, inclusion, transparency, and ethicality. If you’re interested in increasing your support of women-owned, minority-owned, or small businesses, your investments can make a positive impact when you invest in these types of companies. Investments can make a difference in education, healthcare, and affordable housing. Funds can make an even greater impact when you support businesses and organizations whose practices and support align with socially responsible or green efforts in multiple ways. You can truly make a worldwide difference with your support.
Making a Positive Impact With SRI
There are many ways you can make a positive impact with socially responsible investing. For more support and guidance toward SRI, contact EGÉA SRI today.
Disclosure:
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.
