What is socially responsible investing?

Socially responsible investing (SRI) is about growing your wealth for the future while actively contributing to the betterment of society and the environment. This investment strategy considers environmental, social and governance factors, collectively known as ESG factors. It goes beyond excluding controversial sectors and adopts a more inclusive approach, identifying companies or organizations that demonstrate ESG best practices and generate a competitive financial return, while providing a positive social or environmental impact.

Why does responsible investing make sense?

Responsible investing is not just about securing financial growth for the future, but also about actively contributing to the betterment of society and the environment. It recognizes that business practices harming people and the environment can jeopardize company reputations and investments. By incorporating responsible investing strategies, you can help mitigate risks associated with such practices and safeguard your investments in the long run.

Investing responsibly doesn’t mean sacrificing performance

While responsible investing strategies have previously been seen to occasionally underperform their conventional counterparts, a growing collection of evidence suggests that ESG investments perform at the same level, or better, than comparable strategies over the long term.

As risk management is a key component of ESG investing, companies taking a leadership role in addressing major global challenges in a rapidly changing landscape will likely excel financially, too. Learn about other responsible investment myths here.