Socially responsible investing (SRI) is a hot ticket item right now. A lot of investors are going beyond simply wanting to make money. They want to make money AND do it in a way that also helps bring about social and environmental change.
What can you tell me about it?
In this post, I’m going to:
- Provide you with some background on socially responsible investing
- Tell you how it works, and
- Give you tips about how to get started with it!
So sit back, relax, and learn about how you can make money and help others!
Tell me more about socially responsible investing!
There are many ways to refer to SRI such as ethical investing, sustainable investing, or socially conscious investing. The goals, no matter what it’s called. are the same. The three primary goals of SRI are to:
- Make investors money.
- Avoid supporting industries that may be considered harmful – either to individuals or to the environment or both
- Help support social change and environmental responsibility. For example, SRI can involve investing in organizations that help support human rights or are developing clean energy sources.
The areas socially responsible investing focus on change over time and reflect the social and political “hot button” items. In the 1960s, for example, a big focus of socially responsible investing was on civil rights and anti-war movements. Today, one of the biggest focuses of it is fighting climate change.
How does socially responsible investing work?
Socially responsible investing works by investing in companies that engage in positive corporate practices. These can include promoting the following:
- Environmental responsibility
- Human rights
- Racial and gender diversity
- Social justice
- Economic equality
- Community investment
Socially responsible investing also seeks to avoid investing in areas that could be considered harmful or having negative social effects. SRI funds may avoid investing in some or all of these areas:
- Alcohol/Tobacco/Gambling
- Weapons/Military
- Fossil Fuels
- Pornography
How can I get started investing in a socially responsible manner?
Lots of companies now offer socially responsible investing – the key is to determine what’s most important to you. Some things to consider are:
- What key causes that are most important to you? Do you want to invest in a fund that supports a variety of causes or do you prefer a fund that focuses on one or two specific areas?
- How much do you have to invest and how long do you want to invest it for?
- Are you willing to pay higher fees or have lower returns than you would if you were not considering SRI?
There are a variety of companies out there that offer SRI funds – everyone from WealthSimple to MacKenzie. The easiest thing to do is start with an investment company or bank you are already with and see if they offer an SRI fund!
You’re ready to get started!
You’ve now learned the basics of socially responsible investing. You’ve learned:
- What the goals of socially responsible investing are
- What types of companies socially responsible investing supports or avoids supporting
- How to get started investing in a socially responsible manner
It is possible to both earn money and help the environment and social causes!
