What is Socially Responsible Investing? Estimating its Feasibility
What exactly is socially responsible investing
or SRI? Is it possible to give back to your country by making these investments
at the first place?
For all those who didn’t have an idea, let us tell
you that the concept of Socially Responsible Investing is for real.
At the very heart of this concept, is an investor’s
urge to invest in a manner which he strongly feels about. One of the most
obvious steps to take in this regard would be to invest in governments and
companies that you as an investor believe value your ideals. Are you
particularly interested in “greeninvesting”? ESG investing refers to Environmental, Social and Governance. SRI investing also entails
community investing and shareholder advocacy. The concept of SRI investment has
actually grown by more than 22% in the last two years. Do read on to find out
more!
Community Investing: A Wonderful Reality for Investors!
Community investing – notably- has actually emerged
as the fastest growing section of SRI. Managed assets alone make for around
$61.4 billion. Now, what does the concept of community investing entail? Here
the investors’ money is used for all those communities within the US and abroad
that are not properly served by the traditional fiscal lending institutions.
The capital is directed to provide low-interest loans. Notably, valuable
community services like education, healthcare and child care are duly prioritized
as well.
Does shareholder advocacy really empower investors to sway things their way?
Shareholder advocacy empowers stakeholders to yield considerable
influence over corporate decisions. In these cases (mostly) investors interfere
when they feel that certain corporate decisions are essentially detrimental for
the society. The main aim of the stakeholders is to proactively make the
corporates change these decisions. They can compel these entities to change
their practices and devise policies that will only prove beneficial for the
society.
There are several ways in which shareholders or
investors can go on to voice their opinions – i.e. through filing resolutions
seeking provision for investors’ votes, dialogues and by educating public about
worrisome issues.
More about SRI
Now, the question is-- is “investment” the only
reason why companies go on to tolerate this degree of “interference” from
investors? Shareholders very simply go on to invest in those companies that
agree with their terms (here essentially directed towards societal welfare).
Entities that end up refusing to “adhere” are simply avoided.
There are certain SRI investments that might only go on to focus on those corporates that are solely working on ideals like “green living”. There are times when corporations become widely diverse as they continue to scale further strides of success. In order to restrict the risk of digression, SRI fund managers can resort to the Restricted Screen Type filtration.