Business
Socially Responsible Investing (SRI) Explained
Discover Socially Responsible Investing (SRI), a strategy that aims to generate financial returns while considering social and ethical impacts.
What is it?
Socially Responsible Investing (SRI) is an investment strategy that seeks to consider both financial return and social good. Also known as ethical or sustainable investing, SRI involves screening investments based on Environmental, Social, and Governance (ESG) criteria. This means investors might avoid companies involved in industries like tobacco, weapons, or fossil fuels, while actively seeking out firms that demonstrate positive impacts, such as those in renewable energy, fair labor practices, or transparent corporate governance.
Why is it trending?
SRI is surging in popularity due to a growing collective consciousness around global issues like climate change, social inequality, and corporate accountability. Younger generations, particularly Millennials and Gen Z, are driving this trend, demanding that their investments align with their personal values. Furthermore, the long-held myth that ethical investing leads to lower returns is being debunked. Many SRI funds are now demonstrating competitive, and sometimes superior, performance compared to traditional benchmarks, attracting a wider range of investors who see it as a financially sound strategy.
How does it affect people?
SRI empowers individuals to use their money as a tool for change. By channeling capital towards responsible companies and away from problematic ones, investors can collectively influence corporate behavior, encouraging better environmental practices and social policies. This gives people a tangible way to support causes they care about through their retirement or savings accounts. For investors, it provides a powerful sense of alignment between their financial goals and personal ethics, allowing them to build wealth while contributing positively to society and the planet.