Socially Responsible Investing

July 10, 2016

Socially Responsible Investing (SRI) is increasingly becoming part of more investor strategies. To provide some background information in regards to what this signifies, SRI is an investment strategy, which seeks to attain financial gain as well as achieve a positive social impact.  

 

An example of SRI is “community investing.” Monetary funds invested in this dimension go directly to organizations that have a tendency to help the community by retrieving funds from secondary sources such as banks.  The funds provided by banks allow organizations to provide their services (which greatly benefit the community) to the general public.  Some examples could include affordable housing as well as loans to start-up businesses.  

 

SRI was not always a profitable path to take when it came to the world of investing. However, as time went on, technological breakthroughs/advancements occurred thus, allowing SRI to be a relatively logical/common path for investors to take.  Below are some of the main benefits of Socially Responsible Investing:

 

  • Socially responsible organizations face fewer risks to class-action lawsuits, boycotts and unfavorable governmental rulings. ESG (Environmental, Social and Governance) screens are used as a risk-assessment strategy for socially responsible organizations.  They are considered heavily when it comes to investment decisions in these organizations.

  • ESG screens tend to filter in economically sensitive/small cap stocks.  Historically speaking, small caps have outperformed the widespread market by a significant margin.

  • Lastly, these types of investments are good for your conscience.  They help society and serve as a mutual benefit for investors and non-investors.  

In conclusion, at TruNorth, we believe that you may take Socially Responsible Investing into consideration too so that you can combine financial success with helping your community at the same time. 

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