Responsible Investing in the 21st Century
For decades, investors looking to make a difference in their local communities often turned to their investment portfolios. However, many investors found it difficult to choose between socially responsible mutual funds. Today, with the creation of Socially Responsible Investing (SRI) funds, investors of all types can incorporate social responsibility into their investment portfolios. Whether you want to know how to invest 10 million dollars or $1, the objective of investing is to achieve financial growth. But investing responsibly means making an investment that contributes to the long-term value of the companies you own while also protecting you against unexpected market downturns and helping you meet your other financial goals.
Investing in socially responsible and impact-driven funds and companies is a trend that is growing at an exponential rate. But how can you invest in socially responsible companies? With the growth of impact investing has come new questions and confusion around this topic.
Responsible Investing, also known as ESG Investing, is a method of investing that considers environmental, social, and governance factors when making investment decisions. Responsible investors believe that investing in companies with sound environmental policies and practices can positively impact the long term.
ESG Criteria That Responsible Investing Should Have:
Environmental performance is an integral part of responsible investing. The practice of responsible investing includes screening out companies whose business activities have a negative impact on the environment or whose products or services contribute to climate change.
Sustainability, as a core ESG consideration, reflects the increasing awareness of the environmental impact of investments. As energy companies have been using wireline in Red Deer and other places to determine that more and more sources of traditional oil and gas are on a decline, they have been sobering up to the fact that sustainability is the future. Sustainable investments, thence, aim to support companies that prioritize eco-friendly practices, reducing their carbon footprint and promoting clean energy initiatives.
Ethics, Governance, and Transparency
Responsible investing (RI) is the growing global phenomenon of investing in companies indirectly or directly, through investment products and services, with a social or environmental purpose that aligns with an individual’s values, beliefs, and lifestyle. Increasingly, RI is mainstream and appealing to both institutional and individual investors.
Investing responsibly is important for every investor, but it’s particularly important for socially responsible investors, or SRIs, who hold stocks based on a company’s environmental, social, and governance (ESG) policies, practices, and products. Investors who care about a company’s social and environmental impact, as well as those seeking to make a positive impact on society, can find some smart ways to put their money to work.
Investing responsibly means investing with and for the planet. It also means investing with and for the people within our community. It can help reduce inequality, promote economic prosperity, and improve the quality of life for all.
A crucial element of responsible investing is ensuring that investments do not contribute to human rights abuses. Investors can engage in responsible investing by incorporating human rights in their investment analysis. The Ethics and Compliance Program of Credit Suisse Group supports this initiative by providing investors with research, tools, and information to help them identify and assess potential human rights risks.
Investing in the local community and being involved in the communities we live in has a myriad of benefits, both for the individual and the community. This has been highlighted in the latest Responsible Investment (RI) Australia report, which found that investing responsibly helps strengthen Australian communities.
When companies make major product investments, it’s possible they could negatively affect the environment with chemical waste. For this reason, it’s smart to consider investments that offset the environmental cost of their products. Responsible investing, or socially responsible investing, is a strategy for making investments that consider a company’s effect on society and the environment.
Millennials are the future, and investing will become an increasingly attractive option as they become more comfortable being financially responsible. However, the biggest concern with investing is still that of return. Investment firms must do more to educate millennials on return expectations.