Socially Responsible Investing (SRI) has emerged as a powerful force in the finance world, enabling investors to align their financial goals with their personal values and principles. SRI includes a range of strategies that consider environmental, social, and governance (ESG) factors when investing.
SRI Portfolio Strategies: Investing with Impact
SRI portfolio strategies offer investors the opportunity to make a meaningful impact while pursuing financial growth. These strategies encompass a variety of approaches, including negative screening, positive screening, shareholder activism, and community investing. Each approach has its own unique characteristics and advantages, allowing investors to tailor their portfolios to their specific values and objectives.
Aligning Values and Returns: Shareholder Activism in SRI
The value propositions of SRI portfolio strategies extend beyond financial returns. By incorporating ESG factors into investment decisions, investors can contribute to positive social and environmental change. For example, negative screening excludes companies involved in activities such as tobacco production or animal testing, while positive screening identifies companies with strong ESG practices. Shareholder activism involves engaging with companies to improve their ESG performance, and community investing directs capital to local businesses and initiatives that benefit underserved communities.1
Negative Screening, Positive Screening, Beyond
Negative screening is a fundamental SRI strategy that involves excluding companies from an investment portfolio based on specific criteria, such as involvement in controversial industries or unethical practices. This approach allows investors to avoid supporting companies whose values and practices conflict with their own. Positive screening, on the other hand, focuses on identifying companies with strong ESG practices and incorporating them into an investment portfolio. This approach rewards companies for their positive contributions to society and encourages them to continue improving their ESG performance.2
Beyond negative and positive screening, SRI portfolio strategies can also include shareholder activism and community investing. Shareholder activism involves engaging with companies to advocate for improved ESG practices. This can be done through direct communication with company management, filing shareholder resolutions, or participating in proxy voting. Community investing, also known as impact investing, directs capital to local businesses and initiatives that address social and environmental challenges. This approach not only generates financial returns but also contributes to the well-being of communities.
Why You Should Learn More About Socially Responsible Investing (SRI) Portfolio Strategies
SRI portfolio strategies offer investors the opportunity to align their financial goals with their personal values and principles. By incorporating ESG factors into investment decision-making, investors can make a positive impact on society while pursuing competitive returns. With a range of strategies available, including negative screening, positive screening, shareholder activism, and community investing, investors can tailor their portfolios to their specific values and objectives.