Socially Responsible Investing Decoded ~ The International Finance

Tuesday, 17 October 2017

Socially Responsible Investing Decoded

What are the factors that you keep in view while making investments? Have you ever thought about it? Has “society” ever featured in your reasons behind making an investment? Is socially responsible investing even possible? We will unravel details right in the course of the post.

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.

About Author

Amit Singh is a founder of Theinternationalfinance.com he share his immense knowledge of Finance in this blog.

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