The Culture

Socially Responsible Investment (SRI) is an umbrella term to describe an investment process which takes environmental, social, governance (ESG) or ethical considerations into account. SRI is not a new concept and has gone by many names through the years: Values-Based investing; Ethical investing; Green investing; Environmental, Social, Governance (ESG) investing; and most recently, Sustainable and Responsible Impact investing .SRI tend to mimic the political and social climate of the time. Karl Marx (1818-1883), a political theorist, 180 years ago, commended an SRI aligned positive initiatives for ethical conduct in workplace relations, production, and the environment. The growth of SRI arises in the 1990s from a combination of legislative compulsion and pressure from actual and future beneficiaries. As awareness has grown in recent years over global warming and climate change, socially responsible investing has trended toward companies that positively impact the environment by reducing emissions or investing in sustainable or clean energy sources. Common themes for socially responsible investments include avoiding investment in companies that produce or sell addictive substances (like alcohol, gambling, and tobacco) and seeking out companies engaged in social justice, environmental sustainability and alternative energy/clean technology efforts. SOCIAL RESPONSIBILTY is the idea that businesses should balance profit-making activities with activities that benefit society; it involves developing businesses with a positive relationship to the society in which they operate. The International Organization for Standardization (ISO) emphasizes that the relationship to the society and environment in which businesses operate is “a critical factor in their ability to continue to operate effectively. It is also increasingly being used as a measure of their overall performance.” Two inherent goals of socially responsible investing: social impact and financial gain. The two do not necessarily go hand in hand; just because an investment touts itself as socially responsible doesn’t mean that it will provide investors with a good return. An investor must still assess the financial outlook of the investment.