Socially responsible investing

"Social investment" redirects here. Not to be confused with Social investment theory.

Sustainable energy is one of many forms of sustainable investing.

Socially responsible investing (SRI)[a] is any investment strategy which seeks to consider financial return alongside ethical, social or environmental goals.[1] The areas of concern recognized by SRI practitioners are often linked to environmental, social and governance (ESG) topics. Impact investing can be considered a subset of SRI that is generally more proactive and focused on the conscious creation of social or environmental impact through investment. Eco-investing (or green investing) is SRI with a focus on environmentalism.

In general, socially responsible investors encourage corporate practices that they believe promote environmental stewardship, consumer protection, human rights, and racial or gender diversity. Some SRIs avoid investing in businesses perceived to have negative social effects such as alcohol, tobacco, fast food, gambling, pornography, weapons, fossil fuel production or the military.[2] Socially responsible investing is one of several related concepts and approaches that influence and, in some cases, govern how asset managers invest portfolios.[3] The term "socially responsible investing" sometimes narrowly refers to practices that seek to avoid harm by screening companies for ESG risks before deciding whether or not they should be included in an investment portfolio.[4] However, the term is also used more broadly to include more proactive practices such as impact investing, shareholder advocacy and community investing.[5] According to investor Amy Domini, shareholder advocacy and community investing are pillars of socially responsible investing, while doing only negative screening is inadequate.[6]

Measuring social, environmental and ethical issues is nuanced and complex and depends on needs and context.[7] Some rating companies have developed ESG risk ratings and screens as a tool for asset managers.[8] These ratings firms evaluate companies and projects on several risk factors and typically assign an aggregate score to each company or project being rated.


Cite error: There are <ref group=lower-alpha> tags or {{efn}} templates on this page, but the references will not show without a {{reflist|group=lower-alpha}} template or {{notelist}} template (see the help page).

  1. ^ Sparkes, Russell (2003-03-14). Socially Responsible Investment: A Global Revolution. John Wiley & Sons. ISBN 978-0-470-85658-1.
  2. ^ C. Logue, Ann. Socially Responsible Investing for Dummies. Wiley. p. 196.
  3. ^ Lemke and Lins, Regulation of Investment Advisers §2:158 (Thomson West, 2014)
  4. ^ Sullivan, Paul With Impact Investing, a Focus on More Than Returns, April 23, 2010
  5. ^ Bradley, Theresa Finally, socially responsible investors can measure their impact, September 24, 2011
  6. ^ Domini, Amy (14 March 2011). "Want to Make a Difference? Invest Responsibly". The Huffington Post. Retrieved 26 November 2011.
  7. ^ Hardyment, Richard (2024-02-02), "Good measurement", Measuring Good Business, London: Routledge, pp. 135–187, doi:10.4324/9781003457732-4, ISBN 978-1-003-45773-2, retrieved 2024-05-23
  8. ^ "ESG ratings are not perfect, but can be a valuable tool for asset managers - KPMG China". KPMG. 2020-10-07. Archived from the original on 2020-11-29. Retrieved 2021-01-26.