Socially Responsible Investment or as some people call it; sustainable, socially conscious, green or ethical investment means considering both financial return and environmental good in order to bring about some social change. For example, avoiding companies that produce or sell additives like alcohol, tobacco, gambling etc. and instead, going for companies engaged in social justice, sustainability, alternative methods of using energy and clean technology efforts counts as socially responsible investment.
You can do so by investing in such companies individually or through mutual funds and exchange-traded fund.
So let’s understand SRI a bit more…
There are 2 main goals of Socially Responsible Investment – social impact and good returns.
It is not necessary that both of them go hand in hand. Just because an investment is socially conscious doesn’t mean it will give high financial returns. So it’s also important that you evaluate the financial viability of the investment.
For instance, one can go for community investing. This kind of investment goes directly to organisations that have a decent track record of social responsibility by helping the community and have not been able to raise funds from banks and other financial institutions. These funds help them to provide services to their communities like affordable housing and loans. This helps in improving the quality of the community in question and decreases their dependency on government’s funds making that community self-sustaining. You can even opt for mutual funds, alternative investments or microfinance.
To sum it up…
Channelising your money in socially responsible investments is a win-win for all. You can make the most of your money while helping a cause that makes the world a better place. Most people think that it takes a bit more work to find the right investment that fits both the criteria, but the best part is that you have to this only once. After you’ve made your choice, you can just keep investing in the same place and be assured that your money is going to a company that you approve of.