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When investing, it’s important to consider your unique personal values, and be able to choose investments that reflect these ethics, without compromising on your financial plans.
With the assistance of a wealth management firm, you can choose investments which align with your core values, as well as your financial goals, through socially responsible investing (SRI).
Read on, to understand what SRI is and how it can benefit you as an investor.
What is socially responsible investing?
SRI is an investment strategy which includes companies actively making a positive sustainable or social change in the world, and are considered highly ethical and impactful.
Many investors choose securities based off of market research and risk level alone, and those with the highest likely returns.
With SRI, a huge contributing factor is how ethical the company is in its operations. One way of recognising this is through a company’s environmental, social, and governance (ESG) rating.
This measures how effectively a company brings positive change in the three key areas. Examples can include how a company handles waste and pollution, how diverse the company is, and what its business ethics are.
SRI also establishes whether a company has affiliations with unethical organisations.
This type of investment strategy can help investors ensure they’re contributing to positive global change through their investments, whilst maintaining the calibre of the investment journey.
The Benefits of Socially Responsible Investing
There are a wide variety of benefits that comes with SRI, including:
Reflective of your investor values
By becoming an SRI investor, you’re not only able to build your wealth for the future, but can do so in a way that aligns with your ethical values.
For many investors, the prospect of making positive change in the world is a crucial value, one which is uncompromisable when seeking financial growth.
With an expert wealth manager guiding you, you’ll be able to invest in a range of companies which boldly reflect the values you hold dear.
You can rest assured that your investments will be as effective at bringing financial growth as they are positive change.
Forward-looking investments
Another benefit to SRI is that you’re investing in forward-looking companies, with higher scores from an SRI perspective.
These companies are often more adaptable to societal and environmental impacts, since their nature is often to bring about positive change in the world. Instead of being vulnerable to change, these companies are usually at the forefront of it.
As a result, these companies are less likely to be severely impacted by any changes – whether slow or sudden – to how society perceives certain industries and businesses.
For example, as waste pollution becomes more discouraged in society, a company with positive environmental policies won’t receive as much negativity towards it.
In turn, it’s unlikely to see these companies suffer from things like brand erosion or litigation, for instance.
As an investor, you can potentially have a higher level of confidence and security with SRI, since there’s lower risk of certain changes unfavourably impacting your investments.
With a clearer understanding of SRI and what it can do for you as an investor, be sure to speak to your wealth manager about the potential opportunities of an SRI portfolio. Please note, the value of your investments can go down as well as up.