Socially responsible investing
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Socially responsible investing (SRI) is an investment strategy that seeks to align financial decision-making with personal or institutional values.[1]
SRI supporters often prioritize the moral implications of investment decisions over financial returns. S&P Global said the approach "emphasizes financial returns as a secondary consideration after the investors’ moral values have been accounted for in their decision-making.”[2]
SRI differs from environmental, social, and corporate governance (ESG) investing strategies. ESG investing typically focuses on risk assessment, rather than moral priorities, in considering environmental, social, and other nonfinancial criteria.[2]
Socially responsible investing: use of the term
The term socially responsible investing is often used broadly to refer to sustainable investing, responsible investing, ethical investing, and values-based investing. In some contexts, the abbreviation SRI has evolved to stand for sustainable, responsible, and impact investing.[1]
Socially responsible investing: differences with (ESG) investment strategies
Environmental, social, and corporate governance (ESG) investing, a concept developed in the early 2000s, is similar to socially responsible investing (SRI) but differs in emphasis. SRI often applies strict screens to avoid companies perceived to conflict with an investor’s ethical values—such as those in the alcohol, tobacco, gambling, fossil fuel, or weapons industries.[3][2]
Unlike some ESG investors, "[i]nvestors interested in SRI don’t just select investments by the typical metrics — performance, expenses and the like — but also by whether a company’s revenue sources and business practices align with their values. And since everyone has different values, how investors define SRI will vary from person to person."[1]
See also
External links
Footnotes
- ↑ 1.0 1.1 1.2 Nerdwallet, "What Is Socially Responsible Investing (SRI) and How to Get Started," accessed October 10, 2023
- ↑ 2.0 2.1 2.2 S&P Global, "What is the difference between ESG investing and socially responsible investing?" accessed October 10, 2023
- ↑ United Nations, "Who Cares Wins: Connecting Financial Markets to a Changing World," December 2004
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